Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

Nelson Mandela

Mr. Pike: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations Her Majesty's Government have made to the Government of the Republic of South Africa for the release of Nelson Mandela.

The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): With the Commonwealth and our European partners, we have long called for the unconditional release of Mr. Mandela and other political prisoners. The issue was most recently raised with the South African Government last month.

Mr. Pike: As the Minister is aware, Nelson Mandela will be 70 on 18 July. I am sure that there will be a massive show of support in Britain for demands for his release on his 70th birthday. Will the Government give an assurance that they will identify themselves in every possible way with the demands that the South African Government release Mr. Mandela at the earliest possible date?

Mrs. Chalker: Our continuing long-standing support for Mr. Mandela's immediate and unconditional release will again be voiced if there is not the most welcome 70th birthday present for Nelson Mandela. We would welcome his release.

Mr. Burns: Will my right hon. Friend comment on any moves within the EEC to bring pressure on the South African Government to resist the introduction of new restrictions on externally funded aid programmes—

Mr. Speaker: Order. The question is really about Nelson Mandela.

Mr. Winnick: Would not sending birthday greetings to Nelson Mandela show that the Government understand and appreciate that he is the most outstanding South African of his generation? Has he not dedicated his life to fighting racial oppression and tyranny in South Africa? If the Government genuinely believe in human rights, do they not think that those rights should apply in South Africa as well as in the Soviet Union?

Mrs. Chalker: The answer to the hon. Gentleman's second question is yes. As I said to his hon. Friend the Member for Burnley (Mr. Pike), the Government would very much welcome the immediate release of Mr. Mandela

and other political prisoners. We hope that that will happen as soon as possible, perhaps without even waiting for 18 July.
I must say to the hon. Gentleman and the House that there are many outstanding black South Africans. We wish that their common sense could be brought to bear on the untenable position of apartheid that still remains.

Mr. Forth: Is not my right hon. Friend just a little unhappy about any suggestion that countries should intervene in the judicial processes of other countries? Is there any end to that? What would be my right hon. Friend's reaction if the South Africans or any other Government approached Her Majesty's Government demanding the release of prisoners in this country?

Mrs. Chalker: My hon. Friend has posed that question many times and the answer remains the same. We do not attempt to intervene in any case unless we believe that there are political grounds—indeed, very particular political grounds. We have said that on many occasions. The Government's policy on Nelson Mandela has been consistent and we do not intend to change it.

Mr. Kaufman: In response to the Minister's hon. Friend—if she can cal l him that—the Member for Mid-Worcestershire (Mr. Forth), does she agree that if a 70-year-old man had been in prison in Britain for more than 25 years on trumped-up political charges, it would be perfectly right for other democratic countries to protest?
Does the right hon. Lady agree that it is appropriate that the House sends its congratulations and good wishes to Mr. Mandela on his birthday in support of her demand that he be released? Does she further agree that while the release of Nelson Mandela is essential, the ending of the filthy system that has put him in prison is even more necessary?

Mrs. Chalker: The right hon. Gentleman knows me better than to put those slightly barbed questions. I believe that it is a matter for you, Mr. Speaker, whether the House should send greetings to any individual. However, on the occasion of Mr. Mandela's 70th birthday, I sincerely hope that the request of all EC countries and of Governments throughout the world for his release will be granted. I may add that that is the Government's policy and not just mine as an individual, and the right hon. Gentleman should take care to make that distinction.

Mr. Dykes: Does my right hon. Friend agree that the Government's policy is robust and clear and that it is supported on both sides of the House? Will my right hon. Friend do what she implied in her earlier answer and give publicity to others who are not as well known as Nelson Mandela but who are incarcerated with him or still on Robben island, and consider a further collective EC initiative to publicise that tragic and criminal act of continuing incarceration?

Mrs. Chalker: With my right hon. and learned Friend, I shall consider with great care the comments of my hon. Friend. We have always called for the release of all political prisoners and have not restricted that call only to Mr. Nelson Mandela.

Mr. Steel: Following the previous question, does the Minister agree that Nelson Mandela's 70th birthday provides an opportunity for Her Majesty's Government, as the biggest single contributor to the European


Community's programme of support for the victims of apartheid, to protest vigorously against the legislation that is passing through the South African Parliament and which may bring an end to that programme?

Mrs. Chalker: We do not have to wait until 18 July for that to occur; we are making that protest continually and repeatedly. We shall go on doing so for as long as may be necessary.

Israeli-Arab Dispute

Mr. Robert Hicks: To ask the Secretary of State for Foreign and Commonwealth Affairs, whether he intends to take any new initiatives to try to resolve the Israeli-Arab dispute; and if he will make a statement.

The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): We continue to work for the convening of an international conference as a framework for negotiations to resolve the conflict, and we urge all parties to respond positively to Secretary Shultz's continuing initiative.

Mr. Hicks: Is my right hon. and learned Friend aware that the Palestinian uprising in the occupied territories is now entering its seventh month? Does he agree that during that period the Palestinians have shown commendable restraint? Does that not suggest that the time has come, if we are to make the progress that my right hon. and learned Friend seeks, to speak to and recognise the PLO, which represents the Palestinians in the occupied territories?

Sir Geoffrey Howe: I agree with my hon. Friend that the long duration of the patient protest of the Palestinian people in the occupied territories underlines the urgency of the case for action towards the settlement of this long-running dispute. We are in regular dialogue at official level with the organisation to which my hon. Friend refers. The PLO is well aware of those aspects of its policy which make renewed ministerial contact difficult. They are the need to acknowledge without qualification Security Council resolution 242, to recognise Israel's right to exist, and to eschew the use of violence.

Mr. Galloway: Hearing the Secretary of State for Foreign and Commonwealth Affairs, and having returned only a day or two ago from the occupied territories, I wonder whether the Government are as aware as they ought to be of just how serious is the reign of terror in which the occupying forces are engaged. Bodies are being carried through the streets to hospitals and clinics. People are being shot, beaten and gassed—including indiscriminate gassing by crop-spraying aeroplanes flying over refugee camps.
I wonder whether the right hon. and learned Gentleman is aware of the case of an elderly gentleman, Mr. Mohammed Abu Shawish, who is an official of the United Nations and is the refugees services officer in Jabalia camp, and who took the Minister of State around that camp and served as his interpreter? That gentleman's elderly wife of 63—[Interruption.] Please, this is an important point.

Mr. Speaker: Order. I ask the hon. Gentleman, in the interests of others, to be brief.

Mr. Galloway: The 63-year-old wife of the gentleman who helped the Minister of State was savagely beaten by

Israeli soldiers three days after the Minister left the camp. Four of her ribs and her arm were broken by the Israeli occupying troops.

Sir Geoffrey Howe: The hon. Gentleman is quite right to remind the House of the unacceptable conduct being sustained in the occupied territories. I have discussed it in the course of the past few days, not only with Secretary of State Shultz but with the Soviet Foreign Minister, Mr.Shevardnadze. It is clear that, as Mr. Shultz said on his arrival in Israel:
The continued occupation of the West Bank and the Gaza strip and the denial of political rights to the Palestinians is a dead end street … The belief that this can continue is an illusion.
I share the concern expressed by the hon. Gentleman at the possibility of the use of gas in any circumstances in those conditions. As for his particular complaint about my hon. and learned Friend's guide on his visit to Palestine, I shall certainly instruct Her Majesty's consul-general in Jerusalem to contact the family and report immediately. If any kind of link can be demonstrated between the treatment received by the guide and his family and my hon. and learned Friend's visit, we shall clearly have to take an even more serious view of what may have happened.

Mr. Adley: Does my right hon. and learned Friend agree that the activities of the Syrians in Lebanon, particularly in Beirut, are a welcome step in the right direction towards reducing anarchy in that city? Does he not agree that it would be advantageous, if we are to make progress with the peace conference to which he has referred, for diplomatic contact with the Syrians at all levels to be maintained by countries interested in playing a part in the peace process?

Sir Geoffrey Howe: The time has not come, nor have the conditions been fulfilled, for us to reconsider any change in our relationships with the Syrian Government. Clearly, however, any action being taken by that Government that can help towards the promotion of peace, unity and independence for Lebanon is certainly to be welcomed.

Mr. Cartwright: Will the Foreign Secretary again confirm that the Palestinians are just as entitled to a homeland of their own as is any other nation on the face of the earth, and that there can be no lasting peace in the middle east until that simple fact is accepted by all concerned?

Sir Geoffrey Howe: Two propositions stand with equal importance alongside each other: the right of Israel and other states in the area to a secure existence, and the Palestinian right to self-determination. Those are the two bedrock principles on which, sooner rather than later, the parties must begin to negotiate for peace, on the basis of territory.

Ethiopia

Mr. David Davis: To ask the Secretary of State for Foreign and Commonwealth Affairs what reports he has received from Her Majesty's Ambassador in Ethiopia on the situation in Eritrea and Tigray and its implications for the United Kingdom's relations with Ethiopia.

Mrs. Chalker: Although neither Her Majesty's ambassador in Ethiopia nor his staff are permitted to visit


these areas, he reports regularly and fully on the situation in Eritrea and Tigray. Their reports are taken fully into account in framing policy towards Ethiopia.

Mr. Davis: Will my right hon. Friend tell the House the number of people at risk from famine in Eritrea and Tigray? Does not the appalling situation in those provinces, and the restrictions applied to aid workers by the Mengistu Government, tell us that there should be a much more liberal and less extreme regime in respect of the northern provinces?

Mrs. Chalker: The best estimate that we can make of the number of people at risk from famine is some 7 million;3 million in Eritrea and Tigray. We believe that enough food is available at present; certainly it has been pledged. The difficulty will always be delivering food to war-affected areas, and that is made the more difficult if aid workers in the country cannot help in the process. We have urged the Ethiopian Government to reconsider their decision. Some United Nations personnel have been allowed to return to the north, but there are many other aid agency people in Ethiopia who want to help to prevent famine.

Sir Jim Spicer: Does my right hon. Friend not accept that that begs the main question? The people of Eritrea were handed over into bondage under the Ethiopians. They were not consulted about it. They were handed over with the then Government of this country playing a major role. Has not the time come for us to accept that they do not wish to be part of a country that is ruled by a corrupt, evil, authoritarian Communist regime, and should be given the right to decide whether they wish to be independent?

Mrs. Chalker: The territorial integrity of a country such as Ethiopia is a matter that we look at carefully, as my hon. Friend knows. The situation in Ethiopia is serious and worrying, and we will do our best to help in humanitarian terms. However, I am afraid that it is not for us to comment on the allusion of my hon. Friend.

Chile (Plebiscite)

Mr. Worthington: To ask the Secretary of State for Foreign and Commonwealth Affairs whether he has made any representations to the Government of Chile concerning the conditions under which the impending plebiscite will be held.

Mr. Eggar: Yes Sir. We make frequent representations.

Mr. Worthington: I am relieved to hear that news, because there is widespread anxiety among Opposition Members about the deteriorating situation in Chile, which is shared by Solidarity, the Vicararade and Amnesty International. The persecution of trade union leaders and opposition Members in Chile is running at the rate of 95 a month. Will the Minister double his efforts to protest about the deteriorating human rights situation in Chile?

Mr. Eggar: I recognise the concern in the House about the situation in Chile. I assure the hon. Gentleman that, together with our European partners, we make a number of private and public representations about human rights there. We hope that the plebiscite will be conducted in an appropriate manner, and the co-operation among the opposition parties, in particular, is encouraging.

Mr. Temple-Morris: Is my hon. Friend aware that the plebiscite is a reality in which General Pinochet has chosen to offer himself as the only candidate? Therefore, will my hon. Friend accept that the most practical action that the House can take—in conjunction, one hopes, with Washington and our European allies—is to ensure that during the run-up to the campaign—and not just for the statutory 30 days of the campaign—there is fair access to the media for parties that have only the option of campaigning for a no vote and generally fair treatment during the campaign? Will he exercise pressure on behalf of the Government to that end?

Mr. Eggar: Of course, no announcement has yet been made about whether General Pinochet will be the candidate, although there are a number of rumours to that effect.
It is important to note that all the major opposition parties have combined and have announced that they will be campaigning for a no vote in the plebiscite. The signs so far are that the plebiscite will be fairly conducted.

Mr. Wareing: I found the answer of the Minister astounding. Surely, there cannot be a freely elected President of Chile as long as the leaders of political parties—such as the leader of the Socialist party—are in prison.Would it not be appropriate for the Minister or, better still, his right hon. Friend the Prime Minister, who has recently visited dissidents in the Soviet Union, to ask the Chilean dictator if they could visit Chile to speak to the dissidents, in the hope that there might be some glasnost in Chile next year?

Mr. Eggar: I have already said to the House—I think that it is widely recognised—that we take an active part in promoting the cause of human rights within Chile. We will continue to do so. However, the fact remains that over 5·5 million Chileans have registered for the plebiscite to entitle them to vote. They are registering at the rate of about 400,000 a month. That is to be welcomed. It has been welcomed by the opposition parties. One has to take account of the fact that the opposition parties in Chile are taking part in that plebiscite and are combining for a no vote.

Mr. Foulkes: The hon. Member for Leominster (Mr. Temple-Morris) has cogently pointed out the shortcomings of the plebiscite. Does the Minister agree that if the plebiscite is to have even a semblance of fairness, it is essential that the right of free association is given to the opposition, along with free access to the media at all times, the immediate lifting of the state of emergency and the immediate release of Clodomiro Almeyda, the Socialist leader? Will the British Government join the American Government and our European partners to make it abundantly clear to General Pinochet and the junta that those are the minimum guarantees to ensure any kind of fairness?

Mr. Eggar: I advise the hon. Gentleman that there is a later question on that matter on the Order Paper. The Chilean Government are well aware of our concern about Senor Almeyda. The democratic opposition now have some access to the television—I know that the hon. Gentleman recognises that as a step in the right direction—but we should like to see more access and we have made that absolutely clear. We welcome Admiral Merino's


recent commitment to lift the state of emergency 30 days before the plebiscite but we should much prefer that to be done now.

Secretary General, United Nations

Mr. John Evans: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to meet the Secretary General of the United Nations; and what subjects he expects to be discussed.

Sir Geoffrey Howe: I have no immediate plans to do so. I last met the secretary general of the United Nations on 23 May. We had a useful and wide-ranging discussion.

Mr. Evans: Will the Foreign Secretary assure the House that the next time that he has the opportunity to have a discussion with the secretary general he will raise the question of chemical weapons? Has any progress been made at Geneva in the talks on the reduction of chemical weapons? I agree with the statement at the special session of the United Nations on disarmament that the use of chemical weapons is a particularly repulsive form of barbarism. Has any progress been made in on-site inspection and verification, especially in commercial chemical plants?

Sir Geoffrey Howe: The hon. Gentleman is right to raise the importance of that point. When I spoke at the United Nations general assembly yesterday in the presence of the secretary general, I devoted a large part of my speech to the need to make headway in outlawing chemical weapons. I stressed the work that has been going on—in which Britain has been taking a leading part—in the Geneva talks and that is technical, difficult and must be pressed ahead urgently. That is why the United Kingdom and the Soviet Union have opened their chemical weapons defence establishments to inspection by each other as a contribution to openness. I also stressed the need for more urgent action to outlaw the spreading use of chemical weapons in conflicts such as the Gulf war.

Mr. Lester: When my right hon. and learned Friend has discussed events with the secretary general, has he raised the deteriorating situation in the Sudan, which causes many of us great concern because there is clear evidence of genocide and complete irrationality in the behaviour of the Sudanese Government? When I last spoke to Sadiq al-Mandi, he particularly wanted the secretary general to go to Sudan and to consider the situation in the Horn of Africa. Has that featured in my right hon. and learned Friend's discussions?

Sir Geoffrey Howe: My hon. Friend is right to draw attention to that. It is not a subject that I discussed with the secretary general when I saw him on 23 May, but I knew that it was on his mind because he was then on his way to the OAU meeting in Addis Ababa. I shall certainly keep it in mind for my next contact with him.

Ms. Short: When the Secretary of State meets the secretary general, will he explain why he would be unwilling to meet the PLO until it renounces the use of force and recognises the right of Israel to exist, when he happily meets representatives of the Israeli Government who are engaged in massive and brutally illegal use of force in the occupied territories and give absolutely no undertaking that they recognise the right of the Palestinian

people to self-determination in their own state, whereas the PLO said that it would embrace all United Nations' resolutions, which includes a willingness to recognise the right of Israel to exist? Why do the British Government have double standards?

Sir Geoffrey Howe: We do not have double standards in that respect—[Interruption.] Nor in any other respect; I always address myself to the question.
When I met the Foreign Minister of Israel in Brussels about three weeks ago it was clear that he well understood the need to respect the rights and aspirations of the Palestinian people, and it is on that basis that one has contact with the properly established Government of a country with whom we have diplomatic relations.
With regard to the PLO we have striven very hard—the hon. Lady may remember our efforts of two years ago—to establish a meeting of a joint delegation of Palestinian and Jordanian people on well-known terms—the repudiation of violence, recognition of resolution 242 without qualification and recognition of Israel's right to exist. In our judgment—we are not alone in this—it is important to go on emphasising those conditions.

Dr. Blackburn: When my right hon. and learned Friend next meets the secretary general of the United Nations will he confirm that it is the view of Her Majesty's Government that United Nations resolution 242 is not negotiable and that the Government stand four square upon it? Will he also consider the prospect of helping in the process of restoring diplomatic relations between the state of Israel and Russia?

Sir Geoffrey Howe: Our commitment to the importance of resolution 242 goes without saying and it is of the utmost importance. The restoration of diplomatic relations between the Soviet Union and Israel is clearly worthy of consideration. I know from my recent meetings with the Foreign Ministers of both countries that that is in the minds of both parties.

Mr. Anderson: The Foreign Secretary will be aware that there was some confusion in our press yesterday as to whether the Prime Minister had received a communication from the secretary general about Cyprus and particularly on the latest initiative of the secretary general in respect of that island. Was that letter received in our capacity as a guarantor power? What response will the Government make? Will we try to persuade the President of Cyprus and the leader of the Turkish Cypriot community to meet as foreshadowed in that letter?

Sir Geoffrey Howe: The Cyprus question is another important matter that the Prime Minister and I both discussed with the secretary general during his visit here on 23 May. We give strong and continuing support to his efforts to reach a settlement.
Yesterday in New York I was able to have a short meeting with President Vassiliou and I was glad to welcome his readiness for negotiations under the auspices of the United Nations. Yesterday he reaffirmed that readiness to the secretary general. In the same way we are encouraged by Mr. Denktash's acceptance, in principle, of the secretary general's initiative to attend an early meeting with President Vassiliou. We are in close and continuous contact with the parties. The only thing that is not yet well established is the existence of a letter of the type to which


the hon. Gentleman referred. No such letter has been received, but in its absence we are doing everything we should.

Mr. Boswell: On a more domestic vein, will my right hon. and learned Friend consider raising with the secretary general the question of outstanding arrears of subscriptions to the United Nations by various member states?

Sir Geoffrey Howe: Yes, I discussed that matter with the secretary general when we met. It is an important matter because, at the beginning of the year, no fewer than half the member states of the United Nations were in arrears with their assessed contributions. We shall continue to press the matter.

Entry Clearance Applications (Indian Sub-continent)

Mr. Madden: To ask the Secretary of State for Foreign and Commonwealth Affairs what further proposals he has for reducing delays in entry clearance applications to the United Kingdom from the Indian sub-continent.

Mr. Eggar: More than 90 per cent. of visit-visa applications in the Indian sub-continent are processed within 24 hours. Any delay in remaining visit cases is usually due to the need to produce further documentary evidence.

Mr. Madden: Is the Minister aware that there has been a sharp increase in the number of settlement applications referred to the United Kingdom for inquiry? Is he aware that that means that many fiances and spouses are having to wait an extra six or 12 months for a decision to be taken on their application, having already waited anything up to 12 months for an initial interview? Will he encourage overseas posts, especially Islamabad, to reduce the number of applications referred to Britain for local inquiries to be made, or press the Home Office to appoint more immigration officers so that the necessary interviews and inquiries can be conducted far more expeditiously than they are now?

Mr. Eggar: At the end of 1979 there were almost 43,000 people awaiting interview in the Indian sub-continent. There are now just over 12,000. The hon. Gentleman will welcome that considerable progress. Only four years ago we had 43 ECOs in the Indian sub-continent and we now have 86. Perhaps the hon. Gentleman might occasionally welcome the improvements that have been made.

Mr. Marlow: Is it not time that we considered introducing a language test for those seeking entry clearance to this country'? Where both parties to a marriage have a common language and that language is not English, is it not more sensible, sensitive and humane for them to be settled in the country where that language is spoken?

Mr. Eggar: I am sure that my hon. Friend would receive a full reply to that point from the Home Office.

Mr. Janner: Does the Minister accept that the delays in obtaining entry clearance documents are not the end of the matter because the delays at Heathrow for people who arrive there remain unworthy, intolerable and among the worst of any airport in the world? Does he propose to

attend to that end of the problem and thereby to make life decent and easier for those who visit this country. never mind those who wish to stay?

Mr. Eggar: While all delays at airports are regrettable there has been a dramatic improvement since we introduced the visa regimes in the Indian sub-continent.

China (Economic and Trade Relations)

Mr. David Shaw: To ask the Secretary of State for Foreign and Commonwealth Affairs what role his Department is playing in promoting economic and trade relations with the People's Republic of China.

Mr. Eggar: We work closely with the Department of Trade and Industry to help British exporters. British companies have won substantial contracts financed at concessional rates under our bilateral aid programme. The claims agreement signed with China in 1987 has opened access for China to the London capital market.

Mr. Shaw: Is my hon. Friend satisfied that British business men are doing enough in this respect and taking advantage of all the opportunities that his Department is opening up? Does he think that if more was done by British business men the economies and jobs of both countries would benefit?

Mr. Eggar: We welcome the considerable commitment that has been made by British business. More than 2,500 British business men visited our posts in China in 1986. There are more than 20 companies with permanent representative offices and we have no fewer than 11 United Kingdom-based commercial staff in Shanghai and Beijing.

Mr. Mullin: Does the Minister have any plans for raising with the Chinese Government the issue of human rights in that country; or ant I being naive?

Mr. Eggar: I would not want to comment on the second part of the hon. Gentleman's question, but human rights and other issues are discussed when my right hon. and learned Friend meets representatives of the Chinese Government.

Mr. Roger King: Does my hon. Friend agree that we are seeing in China a degree of reform in its economic policies by the concentration of economic growth on a growing number of small business men? Is not that factor very much to the fore in this country and can we not export some of our economic reforms under Thatcherism to China?

Mr. Eggar: My hon. Friend is absolutely right. There has been a considerable resurgence in economic activity in China and it is largely due to the liberalisation reforms that have been introduced by that Government. The economic policies propounded by my right hon. Friend the Prime Minister have been followed not only in China, but throughout the world.

Hong Kong (Basic Law)

Mr. Jim Marshall: To ask the Secretary of State for Foreign and Commonwealth Affairs when and how he intends to make representations to the Government of China in relation to the Basic Law of Hong Kong.

Sir Geoffrey Howe: The drafting of the Basic Law is the responsibility of the Chinese Government. If there are points which we consider are inconsistent with the joint declaration, we shall make our views known to the Chinese authorities clearly and firmly.

Mr. Marshall: Is the Foreign Secretary aware of the rising tide of migration from Hong Kong, particularly among professional people who fear for their future there after it is taken over by China? As a consequence of that, does he propose to suggest any alteration to the draft Basic Law to seek to allay the fears that are giving rise to migration?

Sir Geoffrey Howe: I am aware that there has been some increase in the amount of emigration from Hong Kong, not least because of increased opportunities in some of the recipient countries. There are also large numbers of people returning to Hong Kong. That should be regarded as an important factor in maintaining confidence in the territory. It was on that basis that I discussed it yesterday with the Chinese Foreign Minister, when I met him in New York. In the same conversation I made it clear, as he well knows, that it is important for the Basic Law, which is now the subject of consultation for a five-month period, to fulfil precisely the commitments which were so important in the joint declaration signed by both countries. We shall continue to stress its importance in the many opportunities open to us.

Sir Peter Blaker: While there are probably some parts of the draft Basic Law which need to be changed, which would not be surprising in any first draft, does my right hon. and learned Friend agree that the wide consultations that the Chinese authorities have arranged regarding the draft Basic Law, both before its publication and since, shows their desire for the final Basic Law to correspond with the joint declaration and to be acceptable to the people of Hong Kong as a whole?

Sir Geoffrey Howe: I agree strongly with that point. The Basic Law first draft as published is itself a substantial document with important alternatives on some key points. It is expressly the subject of wide consultation in Hong Kong. When I was there last week, I welcomed the willingness of the Chinese authorities to consult as fully as they are doing. I am sure that will make an important contribution to confidence in Hong Kong.

Dr. Bray: Is the Foreign Secretary aware that the draft of the Basic Law departs from the joint declaration in certain important respects, such as the autonomy of the special administrative region and the power of the courts in Hong Kong to determine the legitimacy of legislation, rather than for this to be determined solely by Beijing? Is the Foreign Secretary aware that the strength of his position has been undermined by his statement in Hong Kong that full democracy is not for Hong Kong?

Sir Geoffrey Howe: It would have been if I had said that. What I said was that at the time of the original commitment in the course of our negotiations on the joint declaration, when we secured a commitment to an elected legislative authority, that did not necessarily imply any particular form of election in any particular volume. That has been the subject of many discussions in the subsequent Green and White Papers, the latest conclusions of which were welcomed by an overwhelming majority of the

Legislative Council the other day. The Basic Law itself makes important provisions for the independence of the judiciary, for the continuation of the common law system and for final judgment to be vested in Hong Kong, but I am aware that difficult areas are bound to exist in the distribution of powers of this kind, which are the subject of further consideration in Hong Kong.

Turkey (Human Rights)

Mr.AnthonyCoombs: To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has received on human rights violations in Turkey.

Mrs. Chalker: We have received a number of representations. The Turkish Government are well aware of our views about this matter.

Mr. Coombs: Will my right hon. Friend confirm that despite numerous requests to the Turkish Government, direct and through the United Nations, there are still 1,619 Greek Cypriot citizens unaccounted for, many of whom were taken to Turkey following the Turkish invasion in 1974? Will my right hon. Friend assure the House that any significant progress on the Turkish application for full EC membership will be made conditional upon the rectification of such human rights abuses?

Mrs. Chalker: May I comment on the second part of my hon. Friend's question. In accordance with standard procedures, the Turkish application for membership of the Community was referred in April last year to the European Commission for the preparation of an opinion. Any Government would reserve comment on an application until they had studied the Commission's opinion. That is by no means likely to come forward soon. Of course we recognise that any application to join the Community has in it the understanding that the rules of the Community will be abided by; that includes human rights.
As to my hon. Friend's question about the specific number of missing Greek Cypriots who may be in Turkey, the Turkish and Greek Prime Ministers called in Brussels in March this year for the reactivation of the United Nations missing persons committee. We believe from the Greeks that some missing Greek Cypriots may be in Turkey, but the Turks deny it. I shall go further into this issue because it was discussed between the Greeks and the Turks when they met in a committee following the meeting between the two Prime Ministers in Davos.

Mr. Morley: Apart from considering the important issue of human rights in Turkey, will the Minister ensure that the veto is used to keep Turkey out of the Common Market until there is some genuine progress in resolving the situation in Cyprus and a move towards the reunification of the island?

Mrs. Chalker: The hon. Gentleman raises a matter that is with the Commission and which is not likely to come back to the Council of Ministers for some considerable time. As my right hon. and learned Friend the Foreign Secretary said in answer to a previous question, resolving the problems of Cyprus is very much a matter of the two communities beginning to talk together. I have every confidence that such talks will take place and that


gradually through the umbrella of the United Nations, we shall seek to give whatever help we can to resolve the problem of Cyprus.

Mr. Madel: Will my right hon. Friend confirm the Government's view that Turkey should not become a member of the European Community as long as it keeps part of its army in Cyprus?

Mrs. Chalker: I do not think that we have to address that specific question at this time. As far as one can see the matter is far off. I remind my hon. Friend that any application to become a member of the Community has to have the assent of the European Parliament. It is well known how strongly the European Parliament exercises its views on human rights issues. The Parliament will be looking at the matter as will member Governments of the Community. As I have said, the whole matter is a long way off.

Mr. Corbyn: Is the Minister of State aware that in Turkey the use of the Kurdish language is officially banned and that people are imprisoned for using it? Is she also aware that many people have been in prison for the past few years because of their political opinions, that some trials have continued for three or four years and that today in Ankara the trial opened of the general secretaries of the Workers' party and the Communist party of Turkey? Does she not think that it is time for the Government to condemn all abuses of human rights in Turkey and to stop propping up the Turkish Government diplomatically and supplying them with arms?

Mrs. Chalker: As usual I am afraid that the hon. Gentleman has made one or two assertions which are his views and a long way from the actual situation. The trial of Mr. Kutlu and Mr. Sagin opened today in Turkey. We are well aware of the allegations of torture and expect Turkey to abide by the European and United Nations conventions against torture. We are confident that Mr. Kutlu and Mr. Sagin will receive a fair hearing under Turkish law. It is vital that human rights are respected throughout the world, and that excludes nobody, but nobody.

United States Secretary of State

Mr. Allen: To ask the Secretary of State for Foreign and Commonwealth Affairs when he will next meet the United States Secretary of State, Mr. Shultz; and what subjects he expects to discuss.

Sir Geoffrey Howe: I met Mr. Shultz in London last Friday and shall meet him again in Madrid this evening. We regularly discuss a wide range of bilateral and international topics.

Mr. Allen: When the Foreign Secretary meets Mr. Shultz in Madrid this evening, will he ask him what plans he has to reciprocate the withdrawal of Soviet troops from Afghanistan? What gestures will be made by the American side? If Mr. Shultz has no concrete suggestions, will the Secretary of State suggest that Mr. Shultz should see his colleagues and friends in Honduras and ask them to disperse the Contra bases that still exist in that country?

Sir Geoffrey Howe: I doubt whether I shall be discussing the latter point with Mr. Shultz in Madrid this evening, or in the near future. On the first point raised by

the hon. Gentleman, he has a total misunderstanding of the situation. The idea that anyone should take any reciprocal action for the action of the Soviet Union in withdrawing its troops from Afghanistan is wholly without foundation. The world welcomes the decision by the Soviet Union to withdraw its troops and to complete withdrawal this year. We now look forward to an opportunity for the Afghan people to reach a comprehensive peace settlement on the basis of a Government acceptable to them all.

Mr. David Howell: In preparation for his meeting with Mr. Shultz, will my right hon. and learned Friend make it quite clear that, contrary to some newspaper reports, he holds no preference between one American presidential candidate and another in the forthcoming presidential election, that that is a matter for the American people to decide, and that either would do quite nicely?

Sir Geoffrey Howe: I am grateful to my right hon. Friend. As I said on the David Frost programme on Sunday—that important organ of public opinion—it is part of the democratic process that one works with the leader who emerges at the end of the day. I and Her Majesty's Government look forward to continuing close and friendly co-operation with whatever Administration emerges.

Mr. Ernie Ross: When the Foreign Secretary meets Mr. Shultz tonight will he discuss with him the failure of his most recent peace initiative in the middle east? Will he try to explain to Mr. Shultz that it is no good making rather bellicose statements in Israel, Egypt or anywhere else in the middle east unless the Americans are prepared to meet the Palestinians, and that means meeting representatives of the Palestine Liberation Organisation? Would it not help if, when he meets Secretary Shultz tonight, he confirms that he intends to meet the Palestinian representatives?

Sir Geoffrey Howe: The hon. Gentleman may not have observed that on his arrival in Israel on this occasion, Mr. Shultz offered to meet Palestinian representatives, but unfortunately they were unwilling to meet him. The important thing to acknowledge about the latest sustained initiative by Secretary Shultz is the tenacity with which he is pursuing it. It is enormously to be welcomed that he is continuing his visits to the region, pressing both sides with the central, inescapable features that the prospects of peace must be founded on the recognition of Israel's right to a secure existence and on the recognition of the Palestinian right to self-determination, and that those parties must get together on that basis. I very much welcome the extent to which Mr. Shultz has been hammering home those essential features and emphasising to all those concerned that the present state of affairs cannot possible continue and they have to get together and look for a better future.

Mr. Bill Walker: When my right hon. and learned Friend meets Mr. Shultz and discusses with him the problems of the West Bank, will he remind him of the post-Palestinian era and that the Arab legion was the first occupying army on the West Bank? It occupied it in 1948 and was not removed until some time later. That has bedevilled the situation and the attempts that have been made to find peace in that area.

Sir Geoffrey Howe: I think that is one of the features which I shall not be drawing to Mr. Shultz's attention, because I do not think that either side is likely to find material for building a better future by digging that deep into the past.

Mr. Robertson: Over brandy this evening in Madrid, will the Secretary of State take the opportunity to explain to Mr. Shultz why only seven days after Mikhail Gorbachev and Ronald Reagan choked off the rhetoric of the cold war, the Secretary of State for Defence and the Minister of State, Foreign and Commonwealth Office chose yesterday to kick-start the engine of confrontation by bleating out the redundant vocabulary about the increasing Soviet threat? Is it not bizarre that the Right-wing President of the United States of America should now be preaching international reconciliation while Ministers in this Government are preaching confrontation and conflict?

Sir Geoffrey Howe: I have seldom heard the hon. Gentleman achieve such profound misunderstanding.[Interruption.] The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) says that if I were here more often I would hear it more often.
I shall try to resolve the misunderstanding between the hon. Member for Carrick, Cumnock and Doon Valley and the hon. Member for Hamilton (Mr. Robertson). Of course we welcome the tremendous progress that has been made during the past five years in establishing a better, sustainable foundation for East-West relations, and it is important to acknowledge the part played by Mr. Reagan and by Mr. Gorbachev, but it would be foolish to allow ourselves to forget the continuing reality. As I said to the United Nations yesterday, the Soviet Union continues to maintain an offensive weapons posture and to launch a new submarine every 36 days, and it will achieve complete renewal of inter-continental resources from the mid-1980s to the 1990s. We have to maintain a reality in our minds while we go on working, as we shall go on working, for steady improvements in the long-term pattern of East-West relations.

Mr. Sackville: Will my right hon. and learned Friend impress on Mr. Shultz the fact that, however great are the improvements in United States-Soviet relations, the Soviet Union retains two important characteristics—it is the most heavily armed nation ever in peace-time and it is a dictatorship? That is a very dangerous combination.

Sir Geoffrey Howe: I shall continue to remind Mr. Shultz, although he does not need reminding of it, that there has been no reduction in the Soviet threat to Western Europe. It still retains a massive conventional superiority and an overwhelmingly large chemical weapons capability. Moreover, it still retains almost all of the features of a totalitarian state. Only modest qualifications have been made. Modifications are being made. We shall continue to press for them and to welcome them, but we shall continue to maintain the vigilance that is proper in this matter.

Senor Clodomiro Almeyda

Mrs. Clwyd: To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he intends to make to the Government of Chile in relation to the continued imprisonment of the Socialist Party leader Clodomiro Almeyda.

Mr. Eggar: The Chilean Government have been told on several occasions of our concern, and that of our European Community partners, about Senor Almeyda since his arrest in 1987. We remain in touch with our European Community partners on this issue.

Mrs. Clwyd: Does the Minister agree that while significant leaders of the Left such as Mr. Almeyda remain in prison on trumped-up charges, there can be no meaningful return to democracy in Chile? Does he further agree that it is an utter deception for him to suggest otherwise, as he did earlier?

Mr. Eggar: I made it clear that we have made representations about the treatment of Senor Almeyda. I said, and I am happy to repeat it, that there have been considerable moves in the right direction in Chile. They have not gone nearly far enough, but we should at least recognise movement when there has been some.

Mr. Gow: To what extent, if at all, is it a principle of British foreign policy that we do not interfere in the internal affairs of other sovereign states?

Mr. Eggar: I did not recognise my hon. Friend criticising the President of the United States for making representations about human rights in the Soviet Union. It is clearly recognised, by the various United Nations and other conventions to which we are party, that we have a right to indicate our views on human rights in other countries.

Mr. Heffer: Is the Minister aware that I agree with what he said to the hon. Member for Eastbourne (Mr. Gow)? It is important that the British Government are as strong about human rights in Chile as they are about human rights in the Soviet Union. Nevertheless, will the Minister be a bit more vigorous about what is happening in Chile, just as the Government have rightly been vigorous about human rights in the Soviet Union?

Mr. Eggar: When the hon. Gentleman leaps to my defence I get slightly worried, but I must tell him and my hon. Friend the Member for Eastbourne (Mr. Gow) that, in regard to human rights, we try to be utterly consistent as between different countries and different regimes. Even if that is not recognised by the hon. Gentleman, it is by the international community and the human rights commission of the United Nations. We have a fine record of being consistent.

USSR (Refuseniks)

Mr. John Marshall: To ask the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the frequency with which he makes representations to the Russian Government about their treatment of refuseniks.

The Minister of State, Foreign and Commonwealth Office (Mr. David Mellor): We raise human rights questions, including the problem of Jewish emigration, with the Soviet authorities at every suitable opportunity. My right hon. and learned Friend did so in detail during his talks with Mr. Shevardnadze in Moscow in February. He also raised some humanitarian cases in his meeting with Mr. Shevardnadze in New York two days ago. We shall be making further detailed representations during bilateral human rights talks in June.

Mr. Marshall: Does my hon. and learned Friend agree that the number of exit visas granted by the Russians is much smaller and the basic Russian laws much harsher than they were in 1979, long before glasnost? Will he continue to tell the Soviet Union that as long as it cheats on the obligations that it accepted in Helsinki, its signature on all other international documents will be suspect? When he next raises individual cases, will he raise the case of Mr. Oscar Eleyev, who has waited 20 years to receive an exit visa from Russia, and Mr. Vladimir Mishkov, who has waited for eight years? Those delays are quite intolerable.

Mr. Mellor: My hon. Friend knows that we raise such cases. I shall look sympathetically at this suggestion that

we raise those two cases and write to him about them. We are looking for an outcome to the Vienna CSCE talks, which will mark a movement forward from Helsinki. We have made it clear to the Soviet Union that we attach importance to it honouring the obligations into which it entered in Helsinki as a sign of its good faith in other agreements. Of course it is important that there should be freedom of movement, but it is also important that some of the pressure in Soviet society from people wanting to leave should be reduced by allowing people religious freedom, so that Jewish people can practise their religion freely in the Soviet Union. That would be a step forward in accordance with the obligations entered into in Helsinki.

National Engineering Laboratory, East Kilbride

Mr. Adam Ingram: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the proposed privatisation of the National Engineering Laboratory at East Kilbride.
The Government announced yesterday in a written answer to me that they propose to sell off to the private sector one of the foremost research establishments in the world. The National Engineering Laboratory celebrates its 40th anniversary in one week's time. During the 40 years of its existence, it has established a reputation not only in this country but throughout the world as a centre of scientific excellence in engineering research.
It is the only major research establishment in this country that is not based in the prosperous south-east. It is the only major research establishment in any of the regional development areas.
Given its importance to the Scottish economy, the manner in which the Government made the announcement, without due regard to the need for accountability in such matters to the House, was decidedly unacceptable and showed contempt for the people who will be affected by it.
The Government have given potential purchasers only until 22 July to submit bids for the establishment. That indecent haste will effectively mean that the sell off will take place when the House is in recess and, therefore, will not be subject to parliamentary scrutiny.
The announcement is completely at variance with the assurances given by the Secretary of State only a matter of weeks ago, when he denied that such a proposition was likely to see the light of day.
The proposal places at risk 600 high-quality jobs and involves the sell off of a major British resource, without regard to the national interest and without any guarantee for its long-term future.

Mr. Speaker: The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
the proposed privatisation of the National Engineering Laboratory at East Kilbride.
I have listened carefully to what the hon. Gentleman has said, but I do not consider that the matter he has raised is appropriate for discussion under Standing Order No. 20. I cannot, therefore, submit his application to the House. I hope that he will find other ways of raising the matter.

Points of Order

Mr. Tam Dalyell: On a point of order, Mr. Speaker. As reported in column 729 of yesterday's Hansard, you said in response to my hon. Friends the Members for Glasgow, Maryhill (Mrs. Fyfe) and Newham, North-West (Mr. Banks) that the possible misleading of the House by the Secretary of State for Education and Science might be a matter of privilege. You asked us to write to you, and that we have done. I understand perfectly well—

Mr. Speaker: Order. The hon. Gentleman has written to me on this as a matter of privilege and I am looking into it. I cannot allow him to raise it now.

Mr. Dennis Skinner: On a point of order. Mr. Speaker. From time to time you are placed in some difficulty as a result of the Government evading their responsibility and not making statements to the House. [Interruption.] There is no need to get excited; we are not setting light to anything.
According to reports today and a written answer, the Government are proposing to announce a serious change regarding planning requirements for local authorities in respect of opencast applications. Bearing in mind the commercial viability that the Government are now asking local authorities to take into account when considering opencast applications, in my opinion and the opinion of many, the change would alter the nature of planning consent by local authorities in respect not only of opencast applications but perhaps of incursions into the green belt in your constituency, Mr. Speaker, and goodness knows how many others.
On occasions, Mr. Speaker, you have chided the Government for using the method of answering written questions late in the day when hon. Members cannot challenge them. Bearing that in mind, will you take steps to ensure that we have an opportunity to raise the matter with the appropriate Secretary of State so that hon. Members on both sides of the House may ask questions about this controversial change in planning consent?

Mr. Speaker: As the hon. Gentleman knows, there are several dozen written questions tabled for answer every day.

Mr. Skinner: It is a big 'un.

Mr. Speaker: It may be a big 'un, but we had better wait to find out what the answer is.

Mr. Bob Cryer: On a point of order, Mr. Speaker. It relates to the Opposition Supply day debate on the takeover bid for Rowntree. As you know, Mr. Speaker, hon. Members are debarred from voting on matters in which they have a direct pecuniary interest. The Government's amendment, in effect, allows, indeed encourages, a takeover bid by Nestlé. The effect of the takeover bid has been to increase share values. Therefore, any Conservative Member who has shares who voted for the amendment would be voting to enhance his pecuniary interest. May I suggest that you call on hon. Members who are in that position not to vote in the debate?

Mr. Speaker: I can clarify the issue. Any hon. Member who has an interest in any of the companies should declare it in the debate. On a question of public policy, it has always been in order for hon. Members to vote.

Alcohol (Health Warning)

Mr. Tony Banks: I beg to move,
That leave be given to bring in a Bill to require the display of a health warning label on all products containing alcohol and to require the display of such notices in licensed premises.
I should make it clear from the beginning that I like a drink myself and I am certainly not approaching this subject from a puritanical point of view. Indeed, for those who believe that alcohol is the devil's brew, I would remind them of the miracle of the wedding feast where Jesus Christ turned water into wine. Presumably he could have turned it into Rowntree's cocoa or Nestlé's coffee, but for reasons that I would not dare to question he chose wine.
The labelling with a Government health warning of alcohol products for consumption is supported by hon. Members on both sides of the House, and I would draw the House's attention to early-day motion 599 in that regard. I am confident that it is only a matter of time before such a measure is adopted. The reasoning behind the proposal is both self-evident and self-explanatory. Drinking alcohol is injurious to health and dependency starts at a very low level of intake. The medical royal colleges recently stated that safe weekly consumption is the equivalent of 10½ pints for men and the equivalent of 7½ pints for women. Those who drink every day—that goes for many people in this House and no doubt many people in the country—are probably on target for some form of alcohol-related illness.
Alcohol is a killer, both directly and indirectly, and reports from the medical royal colleges suggest that at least 25,000, and probably 40,000, deaths a year are linked to excessive or inappropriate drinking.
I accept that long statistical lists are somewhat tedious, but all the available statistics show the growing seriousness of alcohol abuse in this country. A variety of published studies has shown that alcohol abuse is associated with 52 per cent. of deaths from fires, two thirds of suicides, 62 per cent. of serious head injuries among males—[Interruption.]There will be a few more if hon. Members do not listen more carefully to what I am saying. Moreover, alcohol abuse is associated with 45 per cent. of fatal road accidents involving young people, 36 per cent. of road traffic accidents involving pedestrians, one third of all domestic accidents, 30 per cent. of non-traffic accident fatalities and 30 per cent. of drownings. It is a horrendous list, and if hon. Members would like more statistics they can consult the report prepared by two young constituents of mine in Newham, Moira Bramley and Susan Withers, who I know are taking a close interest in this afternoon's proceedings.
A recent study at the university of York by Professor Alan Maynard calculated that at 1985 prices the annual cost to society arising—[Interruption.]

Mr. Speaker: Order. May I ask the House to listen carefully to what the hon. Gentleman has to say about this important matter?

Mr. Banks: I put it all down to heavy lunches, Mr. Speaker.
Professor Maynard estimated that the annual cost arising from alcohol abuse was a staggering £1,846 million


—or £5 million a day. Included in that figure are costs to industry, costs to the National Health Service—about one in five of all admissions are now alcohol related—and costs related to damage arising from road accidents and criminal activities.
Every year at Christmas the Government launch a very welcome campaign to try to reduce drinking and driving. Unfortunately, it concentrates on only one aspect—the indirect consequences of drinking. I believe that the campaign should also cover the direct consequences of drinking excessively and it should be a round-the-year campaign.
Alcohol consumption in the United Kingdom is increasing dramatically in all drink categories. That is especially true of our annual consumption of wine, which has increased by no less than 2,945 per cent. since 1945, according to Customs and Excise figures. The consumption of alcohol has doubled in the past 25 years. While many other countries are actively trying to respond to the call by the World Health Organisation to reduce that figure by 25 per cent. by the year 2000, the United Kingdom is doing the very opposite. The United Kingdom now has a higher per capita consumption of alcohol than the Soviet Union, Finland and Poland—all countries generally accepted in the public mind as having a serious alcohol problem.
It is not really surprising that alcohol consumption has increased so dramatically bearing in mind the additional outlets that are now available for the purchase of alcohol. According to Home Office statistics, between 1973 and 1986 the number of on and off-licence premises increased by 32 per cent. The Government themselves are busy increasing availability by the easing of licensing controls. In addition, while consumption has doubled in the past 25 years, the real price of alcohol has been halved.
The most worrying aspect of all is the incidence of alcohol abuse among young people in the 15 to 24 age range. People under 25 years drink more than those in any other age group. It is calculated that 31 per cent. of men and 23 per cent. of women began drinking before the age of 15. Furthermore, 1,000 children under the age of 15 are admitted to hospital each year with acute alcohol intoxication. Clearly the laws governing the sale of alcohol need to be more rigorously enforced.
Although other age groups can now expect to live longer, there is currently a reduced life expectancy for the 16 to 24 age group due to the rising number of deaths resulting from drink-related accidents. An enormous amount of slick advertising is aimed at encouraging drinking among the young. The industry admits that about £200 million a year is spent on advertising—[Interruption.]

Mr. Speaker: Order. Will the club below the Gangway contain itself?

Mr. Banks: The drinks industry admits to spending £200 million a year on advertising, but I believe that to be a gross under-estimate. It does not appear to include the money that it spends on sports sponsorship, where the brand names are clearly displayed. Advertisements for drinks such as Martini, gin, Pernod and Bacardi are aimed

at creating a glamorous image associated with expensive cars, money, sun-drenched beaches, travel—like the Foreign Secretary—and life in the fast lane generally. Beer and lager advertisements are aimed at the macho image. All drinking is associated with fun and glamour rather than with the sordid picture that the statistics clearly reveal.
If the House granted me leave to introduce the Bill, it would have to be part of an education programme pointing out the dangers of drinking. People generally, but especially the young, do not believe that alcohol is dangerous because they think that if it was the Government would do something about it. That is a rather simple view. The Government have committed £17 million to the drugs campaign, but less than £1·5 million to combating alcohol abuse. To put the figures into perspective, there were 235 deaths from illicit drug use but at least 25,000 deaths from alcohol abuse in 1984—the year for which figures are available. We need a general public information campaign along the lines of those aimed at combating drugs and AIDS.
If my Bill were to become operative, it would require that all bottles and cans displayed labels saying, "HM Government warning—alcohol can seriously damage your health." A notice to that effect would also have to be prominently displayed in all licensed premises, and on all wine lists in bars, clubs and restaurants.
I realise that the drinks industry is politically powerful, with many friends in this House and elsewhere, and also that it gives very generously to the Conservative party. I trust that neither of those facts will prevent the House from dealing with the growing crisis of alcohol abuse. I am not advocating prohibition—that would be both unrealistic and hypocritical because, as I have already said, I like a drink. I am certainly not trying to interfere with the freedom of individuals. I am merely asking that people be advised, at the point of consumption, about the damaging consequences, both directly and indirectly, of drinking alcohol.
The Bill should be only part of a vital education programme aimed at making excessive drinking as socially unacceptable as smoking is now becoming.

Question put and agreed to.

Mr. Speaker: Who will prepare and bring in the Bill?

Mr. Banks: Mr. Ronnie Fearn, Ms. Joyce Quin, Mr. Harry Cohen, Mr. Simon Hughes, Mr. George Galloway, Mr. Robin Corbett, Mr. Dafydd Wigley, Rev. Martin Smyth, Mr. Julian Critchley, Mr. Peter L. Pike, Mr. Barry Jones—and far too many more to mention.

Mr. Speaker: Second Reading what day?

Mr. Banks: Friday 8 July—the slaughter of the innocents day.

Mr. Speaker: Let us just say Friday 8 July

ALCOHOL (HEALTH WARNING)

Mr. Tony Banks accordingly presented a Bill to require the display of a health warning label on all products containing alcohol and to require the display of such notices in licensed premises: And the same was read the First time; and ordered to be read a Second time upon Friday 8 July and to be printed. [Bill 175.]

SCOTTISH GRAND COMMITTEE

Ordered,
That the matter of Health in Scotland, being a matter relating exclusively to Scotland, be referred to the Scottish Grand Committee for its consideration.—[Mr. David Hunt.]

Rowntree plc

Mr. Speaker: No fewer than 22 hon. Members are seeking to participate in this short debate, and I appeal for brief contributions from both the Front and Back Benches. I must announce to the House that I have selected the amendment in the name of the Prime Minister.

Mr. Bryan Gould: I beg to move,
That this House condemns the failure to refer the Swiss bids for Rowntree to the Monopolies and Mergers Commission; regrets that a matter of crucial importance to the Rowntree workforce and to the local communities affected, and which involves the national interest, is to be decided only according to the narrow interests of institutional shareholders; deplores the fact that an important regionally based enterprise is now likely to be absorbed by a Swiss-based multinational; notes that, unlike Swiss companies. British companies are extremely vulnerable to hostile takeovers; and calls upon the Government to adopt merger and competition policies which allow British industry to prepare effectively for 1992 without the constant threat of predatory takeover bids.
We have initiated this debate because we wish to express our disappointment and anger at the Government's failure to refer the bids for Rowntree to the Monopolies and Mergers Commission. That decision represents a betrayal of thousands of people who work in British industry, and a betrayal of all those who wish to see a bright future for that same British industry—particularly given the opportunities which the advent of 1992 and the internal market will present.
That failure represents also a missed opportunity to pause and reflect, to make a proper assessment of where the national interest lies, and to take into account the developing circumstances—which mean that, if this bid goes through, there will be a veritable queue of predators waiting to take their chance in the same way.
That failure came as a great disappointment to, and dashed the hopes of, Rowntree's 13,000 employees. To them, it meant a total denial of their interests. They were, typically, the last people to be consulted, the last to be kept informed, and the last to have their interests taken into account. It is typical of the Government that matters of such importance should be left exclusively to nameless and faceless institutional shareholders, and that the interests of those whose livelihoods depend, day by day, on the ownership of Rowntree should be totally ignored.
Rowntree's 13,000 work force has had to be content instead with airy assurances from the Secretary of State for Trade and Industry that their jobs are not at risk.

Mr. John Marshall: rose—

Mr. Gould: No, I shall not give way. I have only just begun, and the hon. Gentleman must be a little more patient.
The work force has had to be content with assurances based on no evidence or information, as far as one can tell, and carrying no certainty, that jobs are not at risk. Yet those people know the truth, because the food and drink industry, more than any other, has been the victim of merger mania. The employees of Rowntree know from bitter experience that when mergers of this type take place, the catchword has almost always been "rationalisation". They know also that rationalisation has proved in almost every case to be a euphemism for job losses, laying off and redundancies.
They know that in many cases there have been unmistakeable signs pointing to the need for exactly that kind of slimming down. Where the price offered by a predator is much higher than the market price so that the predator is paying over the odds, it stands to reason, and follows as a matter of logic, that at one point or another the new owners must recoup the premium they paid and get their money back. On almost every occasion in the past, that has meant cutting costs, and it has almost always meant cutting jobs.

Mr. John Maples: rose—

Mr. Gould: No, I shall not give way.
That is why the work force at Rowntree is right to be concerned about jobs and why it is right not to place any reliance on the assurances given by the Secretary of State for Trade and Industry.

Mr. Quentin Davies: rose—

Mr. Gould: I will give way in a moment, but first I want to get into my speech.
The second great disappointment which flows from the failure of the Secretary of State for Trade and Industry to refer this matter to the commission was the blow, which so many Government Members recognised when the original statement was made, to the regional economy. The local authorities are in no doubt about that. They held a quasi-historic meeting in York on the day of the announcement and, to their very great credit, a number of Conservative Members, including the hon. Member for York (Mr. Gregory), made it clear that they, too, recognised the regional significance of what was happening. The hon. Member for York used the telling phrase "regional assassination", which is one we endorse. [Interruption.] Let it be clear to those who groan and show no interest in this point that Rowntree is one of only 13 of Britain's top 100 companies to have its headquarters in the regions. We have seen already what has happened in the regions as a consequence of mergers. Scotland, for example, has lost Bells, Distillers, Britoil and Coats and Paton as a consequence of mergers and takeovers. There are many more instances in other parts of the country. That regional element, of such great importance to the north of this country, will certainly be lost if and when Rowntree becomes simply a satellite of a Swiss multinational corporation.
Let me quote someone who, although he may not cut much ice with my hon. Friend the Member for Halifax (Mrs. Mahon), may persuade some Conservative Members. Sir Hector Laing, writing in The Times less than a week ago, said:
If too many of our major companies are taken over by non-British owners, and free market forces make that more rather than less likely, then the UK will become increasingly a satellite economy, with decision-makers based elsewhere.

Mr. Patrick McLoughlin: Would the hon. Gentleman describe a satellite company as one that employs more people in the United Kingdom than in Switzerland? Is it not a telling point that at present Nestlé employs more people in the United Kingdom than in Switzerland?

Mr. Gould: That point, which had certainly not escaped my notice, simply demonstrates that we are dealing with a

very powerful and widely extended multinational, and that the takeover would not mean decision-making in York or even in London, but decision-making in Zurich or Lausanne. That is what is significant and important.

Mr. Quentin Danvies: rose—

Mr. Gould: No, I wish to finish the point.
That is why the takeover would mean not only economic loss to the region in terms of pounds and pence, but loss in terms of skills and decision-making power. I am sorry that so many Conservative Members seem unaware of that important regional dimension.

Mr. John Marshall: Can the hon. Gentleman square his comments with the fact that on 13 May, when the European Parliament was voting on whether to have an emergency debate on the bid by Nestlé for Rowntree, British Labour Members of the European Parliament voted against holding such a debate, and Dr. Barry Seal, a prominent member of the British Labour group, said at a press conference that the best hope for Rowntree was a bid by Nestlé?

Mr. Gould: I had hoped that the hon. Gentleman would recognise more clearly his responsibilities to his own constituency. Let me make it clear that I have no doubt whatever that Labour Members of the European Parliament would vote for the motion we have tabled today.
The failure to refer the bid is a great disappointment to a successful British company. I know that there is always a temptation to treat companies in Rowntree's position as though they were paragons of every conceivable virtue, but the fact is that Rowntree is and has been a profitable, well-managed company with good industrial relations and a good record of investment. It has had great success in building up its brand names. It has shown great marketing flair. It is well poised to take every advantage of the great opportunities, so often lauded by Conservative Members, that are opening up with the advent of the internal market in 1992.
But that company finds that, as a consequence of the Government's irresponsibility, it is denied the opportunity to exploit those advantages. It finds that the Swiss, who have been so much less effective in competing in these markets, have decided to buy what they cannot build. The Swiss have decided, by means of acquisitions, to eliminate a powerful rival and acquire a market share that they could not otherwise obtain.
I believe that that is an indictment of the Government's cavalier attitude towards the interests of successful British companies. If Nestlé acquires Rowntree, the danger is that it will simply dissipate the great achievements which have been worked for for so long by that company. There is the real danger that production will be moved elsewhere. I wonder how many hon. Members are aware that, even under Rowntree's management, major brands in the ownership of Rowntree are being manufactured abroad. For example, Quality Street is being manufactured in Dijon and After Eight in Hamburg. How much greater scope for that diversification and for that removal of manufacturing capacity if the owners are not a York-based company but a Swiss-based multinational.

Mr. John Maples: The hon. Member keeps saying that the only way that Nestlé can recoup its investment is by dissipating Rowntree's assets. Surely, if


one pays more than the assets' book value, one cannot recoup one's investment by dissipating them. The only way one can make them profitable is by bringing the two companies together to make them more profitable than they were individually.

Mr. Gould: With respect to the hon. Member, I did not say that Nestlé would recoup its outlay by dissipating Rowntree's assets. I said that it would reduce Rowntree's costs and would therefore lay off jobs. It can retain the benefits and assets by manufacturing elsewhere.

Mr. Quentin Davies: rose—

Mr. Gould: I have given way often enough. This is a short debate, in which many others wish to speak.
I will pursue the theme of disappointment, because, not least among those disappointments, as a consequence of the Secretary of State's decision, was the disappointment of those people who hoped that at last we might obtain some sign from the Government of a constructive and coherent competition and mergers policy. Those hopes have been gravely dashed by this decision.
In 1984, the former Secretary of State, the right hon. Member for Chingford (Mr. Tebbit), said that the essence of competition policy was competition. One might have thought that that was not the most helpful indicator of where the Government's policy was leading us. However, there were then some wobbles. Elders' bid for Allied Lyons and the Kuwaiti shareholding in BP were referred. The criteria seemed to become more complex. There was at least some hope that the Government were at last prepared to take proper account of the public and national interest.
The problem is that, with this decision, we are back to a situation in which the only element that appears to weigh with the Secretary of State is how he feels when he gets up in the morning. We have little guidance from the Secretary of State as to what criteria he will use in making essential decisions. The danger is that he does not appear to have recognised the growing European dimension. There is every sign that the Government, in their naive enthusiasm for 1992, are losing sight of the fact that, even in that context, there remains an identifiable British national and public interest which it is the Government's responsibility to protect.
The confused state of merger policy, as a consequence of this decision, is not just a matter of substance. It is also a matter of the procedures that are followed. There will be sympathy on both sides of the House for the Rowntree board's complaint that, as a consequence of the time that was taken and the uncertainty that arose between 26 April and the decision not to refer to the Mergers and Monopolies Commission, the Swiss predators were able to build up their shareholding from 21 per cent. to 43 per cent., in circumstances in which Rowntree were powerless to resist.
That happened because shareholders knew—given that there was a chance that a reference would be made—that they had to move swiftly to accept an offer that might not survive. That meant that, in the intervening four weeks or so, Rowntree was unable to stop the rot. Far from confronting a minority shareholding, it confronted the fact that Swiss predators had virtually obtained control before the matter could be decided.

Mr. Anthony Beaumont-Dark: I have been following the hon. Gentleman's

argument closely. Will he agree that one of the problems is that we are talking about 1992 and mergers policy? Rowntree and Cadbury might well have wished to merge in the United Kingdom, but would have been considered a British monopoly. Under the 1992 policy, they would not have been a European monopoly. Therefore, a great opportunity has been lost for those two great companies to get together. It is now too late and, unless the policy changes, it will be too late for other companies as well.

Mr. Gould: I suspect that the situation of Cadbury is worrying from a different viewpoint. Many people fear that, as a consequence of this decision, the next victim being lined up is indeed Cadbury.
The problem is that the decision not to refer this bid is not only a source of disappointment to all the groups I have identified, but also a cause of unease as to what it portends. That unease is widely shared in the House. Again, I pray in aid Sir Hector Laing, who in that same article said:
It seems that in the present climate, any and all of British industry is for sale if the price is right. `Prostitution' is not a pretty word. I am sure we will not sell ourselves cheap, but at any price it is still prostitution.
Even in the face of that stinging rebuke from one of the grandees of the Conservative party, the Government persist in placing their faith entirely in market forces. They glorify market forces as the only arbiter—virtually a moral arbiter—and as the rewarder of those who are virtuous and the penaliser of those who deserve nothing better. The Government take the view that, right or wrong, whatever the market does, however much it cuts across the public or national interest, it must nevertheless prevail. The irony is that the evidence that the Government surveyed in their paper on merger policy lends no support to the view that mergers are in the companies' interest or in the national interest. In fact, the reverse is true.
That paper concluded the appendix on the academic evidence by saying:
Evidence on post-merger performance … supports the earlier findings of disappointing or inconclusive performance. Indeed, the consistency of the results of the various studies and the wide range of approaches used tends to reduce the force of the methodological limitations and to increase the robustness of the findings.
Those findings were that, far from improving their performance, companies involved in mergers were less efficient than the average of those in other countries.
What is true of individual companies is also true of the entire economy. Merger mania reinforces the short-term-ism of which even the Chancellor of the Exchequer has on occasion complained. It reinforces the emphasis on short-term liquidity and performance. It militates against the kind of long-term investment that is so essential to our industrial performance. It also militates against the essential spending on research and development and on training on which our industrial future so closely depends.
As the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) pointed out, all of that will become a more pressing problem as we approach 1992. We are already a more open market than any other in Europe. By virtue of our open stock market, the market for what is now fashionably called corporate control is freer here than it is anywhere else. Whereas in our country virtually any public listed company can be bid for and obtained if the price is right, in countries such as Germany and


Switzerland that is not possible. Hostile bids are virtually unknown, because the way in which industry is financed is different.
The close nexus between banks and financial institutions on the one hand and industrial ownership on the other makes it virtually impossible for a hostile bid to succeed in those countries. Our successful companies have no protection because of the way in which they are structured. Their only protection rests with the law—the Government. The Government are responsible for maintaining the public interest and protecting that interest. If that is not done, then our companies are defenceless in a way that does not arise in other European economies.

Mr. David Shaw: rose—

Mr. Gould: I shall not give way again.
In the case of Rowntree, this decision means that the Government appear deliberately to have turned their back on their responsibility to protect British industry in this way. They have clearly declared that it is open season, that anything goes, that the "for sale" notice is up and that there is a price tag on everything.
The approach of 1992 makes it more likely that the combination of our own openness and the Government's dereliction of duty will mean that huge numbers of British companies will be at risk and that the predators from both within and outside the EC will be queuing up to take their chances. The pity of it is that it is the best and most successful British companies—the companies which have invested, which have good records, which have developed powerful brands in European markets and which are best able to take advantage of the opportunities of the internal market—which will be in the firing line and will be picked off, without the Government lifting a finger to help them.
The Government are bemused and obsessed by their ideological commitment to market forces and their loyalty to international capital. We in the Labour party and those who are concerned about British industry and the regional economy are left to express and fight the case for those interests because the Government clearly have no more concern or interest in such matters.

Mr. Edward Leigh: rose—

Mr. Gould: No, I shall not give way; I am about to finish.
The worrying thing is that, behind Rowntree, comes Cadbury. I met the unions from Cadbury this morning. They know that the writing is on the wall. General Cinema already has a substantial shareholding and we cannot be sure what its intentions are. We know that predators will be sniffing around. Behind Cadbury are legions of other British companies, every one of which must now be frightened that the Government have abandoned them to their fate. That is the tragedy, the great weakness, the failure and the disappointment of the Secretary of State's decision.
With this debate and motion, we are providing an opportunity to say, "Enough is enough." Some limits must be established to protect British industry where it needs that protection and, above all, to encourage British industry where encouragement will open up the

opportunities that we so desperately need. It may be unfashionable, but we shall say loud and clear from the Opposition Benches—we hope to hear some echo from Conservative Members—that there is still an identifiable British interest, which must be sustained, protected and encouraged.
We are not prepared to see British industry sold off to the highest bidder and to become simply a satellite economy with no power to control our own future or the development of our own economy. That is why we tabled the motion and why we believe that the Government's failure to refer the bid is a sign of so much worse to come and of such dereliction of duty. That is why we ask hon. Members of all parties to support the motion, in the interests of British industry and all those whose livelihoods depend on it.

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): I beg to move to leave out from "House" to the end of the Question and to add instead thereof:
'recognises the benefits which inward and outward investment have brought to the British economy: endorses the Government's merger policy as set out in the Department of Trade and Industry's paper on the policy and procedures of merger control published on 3rd March 1988; and supports the decision not to refer to the Monopolies and Mergers Commission Nestle's bid for Rowntree or Suchard's 29.9 per cent. holding in Rowntree, as being consistent with that policy.'
I enjoy being shadowed by the hon. Member for Dagenham (Mr. Gould) and am always interested in taking part in debates with him. However, I continue to be startled by the contrast that steadily emerges between the reputation of the hon. Gentleman outside the House for the views that he holds, and the views that he puts forward in the House on behalf of the Labour party. He is alleged and believed to be one of those in his party who is seeking to edge the Labour movement a little nearer to the days of a free market economy and an enterprise economy. Every time that he—[Interruption.] Well, I am probably doing a great deal of good for the hon. Gentleman's reputation in some quarters—[Interruption.] It is relevant. The fact is that every time that he speaks here on a particular issue he belies that reputation.
Insofar as the assertions that the hon. Gentleman has made today about monopolies and mergers policy in his approach to takeovers shed light on the policies of the Labour party, they take that party right back to where it was in the 1970s, if not before, and miles away from the present position.
Insofar as the hon. Gentleman's arguments led to any view of an overall approach to monopolies and mergers, they not only spoke strongly against any kind of foreign takeover of any British company because that would make us a satellite economy, but the hon. Gentleman was against most inward investment especially if the company had headquarters outside London. On the whole, the hon. Gentleman would rule out mergers that would have any effect on regional companies. By the time the hon. Gentleman finished, it was clear that in most instances he was against the free movement of capital, and against takeovers and mergers.
If the hon. Gentleman were to refer cases on the basis that he put forward, the Monopolies and Mergers Commission would have to acquire several tower blocks to


hold the staff to deal with the applications. The hon. Gentleman would also have to change the law dramatically to make the Monopolies and Mergers Commission recognise his view of economics, British public interest and industrial policy and to start turning down some mergers.

Mr. Gould: I enjoy shadowing the Chancellor of the Duchy of Lancaster, but I cannot let him get away with such a ridiculous failure to distinguish between inward investment and resisting a hostile bid. Will he now admit that such a distinction is important and does exist?

Mr. Clarke: Does it follow from that that the hon. Gentleman is saying that only friendly takeovers will be allowed? I suspect that, in the case of companies based outside London, only friendly takeovers from British companies would be allowed if a London-based company were trying to buy a regional one. Such an approach is wrong. It is important that we begin by clarifying our views on takeover policy and of the situation of one company bidding for another company if the recipient is unwilling to receive the bid—

Mr. Quentin Davies: rose—

Mr. Clarke: I apologise to my hon. Friend, but I must try—as did the hon. Member for Dagenham—to resist interventions because otherwise I shall take too long.
The Conservative party believes that the greatest national public interest lies in allowing such things to take place within the market place. Such judgments are best taken by shareholders, who make a judgment about the likely performance of the companies in which they have a stake. The free flow of capital, both internally and internationally, leads to the best use of national resources in the longer term.
Regardless of the nationality or the location of the company, the very logic of a takeover bid, if one thinks it through, amounts to a bidder who believes that he can produce a better return than the so-called victim is producing under the existing management. The bidder puts up his own money, or that of his backers, to demonstrate his confidence in that judgment. It is the shareholder who makes the judgment about the prospects of the company in new hands. In a free market economy, and in the opinion of the Government, there is no need to stop that process in the vast majority of cases.
We all know that in almost every instance the management at the receiving end of the uncovenanted bid will not wish it to come in, and normally the work force will not either. We can all understand that if we put ourselves in the position, especially of the managers, but also of the work force of the company at the receiving end. It is disturbing to have such a bid. It is much more satisfactory to hope that it will not take place. However, we believe that that is one of the commercial pressures that managements of quoted companies should be under because it is a spur to efficiency and leads to the improved competitiveness of the economy.
We pay this country's top managers highly and we have reduced their taxation. In part the high remuneration that keeps such managers in this country is compensation for the risks that they run and for the day-to-day commercial pressures that I have described. Those in management in private industry are not entitled to look for jobs for life.

They defend their jobs by retaining the confidence of their shareholders by demonstrating the good performance of their company. Everybody benefits if that is the case.
We must appreciate that such cases do not normally justify intervention. Any hon. Member who finds that a company in the locality of his constituency is affected by a takeover bid is usually approached by that company's managers and often by the work force and trade unions, seeking some political defence against the threat. The wariness of managers and their willingness to approach their Member of Parliament to tell the work force and to help them to defend the company has nothing to do with the nationality of the company making the hostile hid. The natural and instinctive reaction of companies at the receiving end of such bids is to resist them.
As the hon. Member for Dagenham said, what is required on the part of the Government is a consistent view of when it is necessary to regulate and to step in because the national interest is genuinely adversely affected by the proposal. That is why we have a clear competition law and the power to refer bids to the Monopolies and Mergers Commission. That is why we take the objective advice of the Director General of Fair Trading. We have set out a policy because it is necessary to be consistent. It is in the Blue Paper to which the hon. Gentleman referred, which showed that he has read it at last. It was not debated seriously when we produced it. That is the consistent policy that we are applying.
All examinations of competition policy have found that, if one wishes to protect the genuine public interest, the key issue on which to concentrate is ensuring that one protects above all the consumer and the customer against monopoly and that one maintains a healthy state of competition in the economy. That is not the only reason. Wider powers are reserved for companies that have some strategic importance to the economy.
We have repeatedly made clear our consistent policy It is wrong for the hon. Member for Dagenham to attack us for lack of clarity. The fact is that the Labour party has not thought through the issues that I have outlined about takeovers and mergers. It is reacting in a populist. ad hoc way wherever it sees political advantage in a particular town by arousing fears about a particular takeover. Let us imagine that we returned to the practices that were adopted at times by the previous Labour Government. Proposals such as the Rowntree takeover would be subjected to delay and scrutiny by politicians and their agencies. Whenever trade union, local or regional lobbies were established, great damage would be done to the free flow of investment in the economy as well as to the economy.

Mr. Gerald Bermingham: rose—

Mr. Clarke: No, I shall not give way.

Mr. Beaumont-Dark: rose—

Mr. Clarke: I always overrun my speeches because I give way too often. I shall follow the lead of the hon. Member for Dagenham and will resist interventions even from my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), whom I respect so much.
The Government believe that the bid for Rowntree is a perfectly ordinary takeover. We agree with the Director General of Fair Trading that there is no reason for the


Government to intervene and nothing to refer to the Monopolies and Mergers Commission. I anticipate that the MMC would find nothing to question about the bid were it ever referred to it. It does not mean that the Government are taking any view about who should own Rowntree. We believe there is no public interest in the case which justifies any suggestion of overriding the judgment of the shareholders. They will determine where they believe the future of the company best lies.
Essentially our critics have made a great issue of this case for two reasons—and for the purpose of an analysis I am aware that I shall simplify the sophisticated arguments. The first reason is that the bid is a foreign one from a country outside the European Community. The hon. Member for Dagenham is always the voice of reason, but, however much he may deny it, if the bid was not a foreign one we should not be bothering with this debate. Chauvinism runs strongly throughout this issue. The second ingenious and interesting argument is that no reciprocal bid could be made by a British chocolate company should it wish to buy a company in Switzerland. I accept both those arguments. Unless the hon. Member for Dagenham is trying to widen this debate against all takeovers, all foreign bids and against the takeover of all regional companies, he is saying that because it is a Swiss bid and because there is no reciprocity it should be referred.
The hon. Member for Dagenham laid great stress on the British interest. I accept that there is enough national feeling in this country for caution to be aroused in the minds of many whenever a foreign bid is made. The British interest should govern what we do and should guide the House in reaching its decisions. I believe that undoubtedly it is in the British interest that we should have the freest possible movement of inward and outward investment. Britain must remain on the side of open international capital markets. In recent years it has become clear that, probably with the sole exception of the United States, we have the most open trading system. That system has worked overwhelmingly to the benefit of the British economy and of British workers.
If we suddenly start to adopt a "little Englander" approach, we shall put behind us recent events that have meant that, second only to the United States, the British are the main acquirers of companies throughout the world. We are the main overseas investors to the great benefit of the British economy. The total accumulated value of British direct investment overseas is double the value of all foreign direct investment in the United Kingdom. The Labour party, provoked by one of my hon. Friends, seems to be against such large-scale British investment overseas.
Let us consider our record. In 1986 the United Kingdom invested approximately £12 billion in overseas markets, making us the world's second largest investor after the United States. That brought total United Kingdom net assets overseas to about £90 billion, or 21 per cent. of our gross domestic product. In 1986 the United Kingdom earned a net £7·7 billion as a result of direct overseas investment. It is forecast that those earnings will increase to £10·8 billion for 1987. We are one of the great overseas investors and the British economy is benefiting

greatly by the inward flow of earnings from such investment. Nationalism will, of course, produce retaliation.

Mr. Tom Clarke: From time to time the right hon. and learned Gentleman gives advice that my constituents find unacceptable. He has done it again this afternoon when he talked about the "little Englander" approach. Is he aware that there are jobs outwith England? He gratuitously insulted management in various parts of the United Kingdom. Alas, some of them voted Conservative at the last election, including, unfortunately, some of my constituents. Those people have committed themselves to their industry. Does he believe it is right to deny them the opportunity to express a view about jobs? What is his view and the Government's view about future jobs in this country?

Mr. Clarke: The number of jobs being created in this country now exceeds that for the rest of western Europe. We have had the biggest single fall in unemployment in western Europe: unemployment has been falling at an amazing rate. That has happened because we are a successful free market economy operating an open trading system. The £10 billion in earnings from our overseas investments is contributing to the well-being of the economy. Inward investment brings jobs, and that is another great advantage of our open trading system.
We shall invite retaliation if we start suddenly to become nationalistic about takeovers. The hon. Member for Dagenham said that we run the risk of Britain becoming a satellite economy. The leader of the Labour party has said the same thing. He has said that Britain is for sale abroad and is becoming an offshoot of American and other foreign companies. The reverse is true. We are at the core of the international economy. There is no evidence that we are losing our dominant position. The idea that we are not in the big league is entirely wrong. Of the 500 largest non-oil companies in whe world, 23 are French, 38 are German and 53 are British. We are by no means a satellite economy. We are the major predator of overseas companies.

Mr. Beaumont-Dark: I am following my right hon. and learned Friend's argument, with much of which I agree. We are an island with a progressive economy and we are taking over many overseas companies. We hold $98 billion worth of investment in America alone. Such investment strengthens our economy and that of the world.
It is important to consider, however, the problems of Rowntree and Cadbury. The other day my right hon. and learned Friend did not like me describing the old monopolies and mergers policy as a shambles, but does he not agree that under that policy Rowntree and Cadbury would never have got together because they would have held more than 50 per cent. of the United Kingdom confectionery industry? They would have been thrown into the hands of the MMC. That means that when Suchard, Nestlé, General Cinema or anyone else comes along our home industries compete with one hand tied behind their back while they are gripped warmly by the throat by foreign competitors. Is it not the job of the Government to say that we have one monopolies and mergers policy that applies to home and overseas takeovers so that British companies can compete on the same basis as foreign companies? That is all we ask.

Mr. Clarke: I shall come to the question of reciprocity in a moment. My hon. Friend slipped into somewhat dramatic language because of his local concern for one of the companies. His favourite solution of a merger between Cadbury and Rowntree has never been put to the test. I cannot envisage what would have been the advice of the Director General of Fair Trading or what the MMC would have said.
There is nothing wrong with a competition policy which put in the forefront the protection of the customer against the building of a strong monopoly position in the United Kingdom market, particularly if the commodity which is being traded is one for which there is a particular British taste. What the hon. Gentleman is advocating may protect the management of Cadbury and Rowntree from overseas bids, but if a merger between them were ever suggested we would have to judge whether it was in the national interest and what effect it would have on the customer. The fact that it would be a merger between two British companies rather than between a British and a Swiss company is irrelevant. The same tests apply to all: what is in the interests of the British economy, and what is the advantage to the customer?
In reply to the hon. Member for Monklands, West (Mr. Clarke), may I say that we must not ignore the effects of inward investment. It is running at a much lower level than outward investment as we buy companies from abroad and it brings jobs. In the north-east of England, for example, there is no resistance to Japanese investment. In the past 15 years 80 Japanese companies have produced more than 25,000 jobs. We are not having our British industry taken over by foreigners on a grand scale. The proportion of our work force working for overseas-owned companies steadily drops because there has been an increase in British investment here. In 1979, 15 per cent. of our manufacturing work force worked for overseas-owned companies whereas by 1985 the figure had dropped to 14 per cent.
The nationality of companies is becoming increasingly irrelevant in modern trading conditions. We are obsessed with where companies have their headquarters and the corporate law under which they operate when that has ever less effect. The case was being based on the job consequences of having a company based perhaps in Zurich rather than York. Everybody knows that Nestlé employs more people here than in Switzerland. It has been established here for over 100 years and enjoys a great deal of support from the people in constituencies where it operates.
What is less well known is the position of Rowntree. It is being said that if the company is not based in York it will employ people abroad. Rowntree employs more people outside than inside the United Kingdom. It employs 15,500 people in the United Kingdom and 17,500 abroad. That position has undoubtedly been increased slightly by the acquisition of a French company, Candice Martial, at the end of last year. Therefore, the idea that a headquarters in York means that employment is secure in the East Riding is a mistake. To look at the alleged nationality of a company is chauvinistic nonsense.
Nestlé is described as a foreign predator and it is no use hon. Members denying their emphasis on the foreign aspect. My hon. Friend the Member for Selly Oak got carried away when talking about foreign companies with their hands around the throats of good little British companies.

Mr. Beaumont-Dark: I was not having a go at Nestlé.

Mr. Clarke: I hope that my hon. Friend was not having a go at Nestlé. Not only has it been here for over 100 years but it makes good products such as Worcestershire sauce, Ashbourne water and Branston pickle as well as Nescafé. [Interruption.] Some Labour Members may deride all those products as foreign muck from now on and may organise a boycott of them in the Tea Room, but that will not be of much advantage to them.
I shall leave aside what I regard as nationalist nonsense and address the arguments about reciprocity. When this came to a head, the reciprocity issue caused considerable anxiety in the House. What is the position when a company is at the receiving end of a hostile hid but cannot make a counter-bid because of the capital structure of the company making the bid? That position is not confined to overseas companies. It has nothing to do with British and Swiss law, or anything of that nature.
Swiss law on the subject is similar to our law. Swiss Ministers have less power over these matters than British Ministers. No Swiss Minister can step in to stop a British bid as my right hon. Friend could if he thought that he was jusified in using his powers. It is Swiss practice which differs from ours, but only in degree. It is not unique to Switzerland and unknown in the United Kingdom. Countless British companies have a similar structure for one reason or another. Is anybody saying that no private company should ever be allowed to make an acquisition without a referral? What about Great Universal Stores, Trusthouse Forte, P and O and the National Freight Corporation? Their capital structure is such that. as with the Swiss, it protects them from bids.
What then is this argument that we should make a reference on the grounds of so-called reciprocity" Should we refer to the MMC any bid made by a company which is bid-proof? Does that include all those British companies? I have never heard that asserted, but it would be an interesting proposition and we shall hear whether any hon. Member advocates it. I do not think that that is being asserted. Some of my hon. Friends, understandably influenced by their Yorkshire or Birmingham connections, are saying, "You can't refer them all just because there is no counter-bid, but you should refer them when it is a foreign company that has this structure against which you cannot make a hid." I do not believe that that makes any sense or depicts a rational monopolies picture.
Even when my hon. Friends say, "Of course, we realise that it shouldn't be like that, but it would influence the Swiss position", I do not understand that. The desire to help the Swiss improve the undesirable nature of its stock exchange practice is deeply moving, but not the main motive of those who argue in that way. Underlying that is the belief that somehow we shall influence the Swiss to change their practice if we refer this bid for a chocolate company to the MMC. That rather assumes that if we refer the bid to the MMC it will find some ground for overruling the bid, but neither the director general nor the Government are clear what that would be. The argument is not sustainable when one thinks it through. To react in that way to this particular bid will not have the slightest effect on Swiss practice. It is an extraordinary way to try to go about altering Swiss practice. For those reasons, I do not believe that there is any serious point in reciprocity.
The final major point that will undoubtedly be raised is the European dimension to the problem. So far I have


never understood clearly what people think that is. It is certainly true that the approach of 1992 combined with the booming state of our economy makes this look a good place to make money and is attracting inward investment. That is to be encouraged and it must be our aim to acquire a higher share of that than our European partners. It is also true that in the long run we shall no doubt look at a European-wide merger and competition policy as the new market develops. We are not ready for that yet, but we are taking part in the discussions on it.
I trust that no hon. Member will assert that the Common Market will be a protectionist Common Market or that the British should intervene on the European front, saying that non-EC bids should suddenly all be subject to some new restrictive EC policy. That would be a recipe for encouraging the decline of the European economy. We have a strong interest in maintaining and encouraging an open international flow of investment. 1992 will bring more of that to the United Kingdom. If our market is more open than that of the French, the Germans, the Belgians and so on, it will be an advantage to us.
Where does that leave us in this case? It is a straightforward takeover bid and it should be decided as all others are—by the shareholders considering the best interests of Rowntree. The fear that has been aroused among the work force is wholly misplaced. Some hon. Members have already intervened to point to the absurdity of claiming that a company will go to this length to acquire a major manufacturing base in the United Kingdom simply to close it down. The idea that rationalisation is more likely in the case of an acquisition by a foreign company that has rather different products, albeit chocolate, than by a British company operating in the same market with many more similar products is misplaced. All these are absurd arguments which are raising needless fears.
Earlier the hon. Member for Dagenham was not so certain. He asked why the bid should not have been referred to the Monopolies and Mergers Commission to be tested. That would have caused delay, uncertainty and rising alarm. At one point he was complaining about the effect of delay. He said that waiting for the advice of the director general allowed the share price to go up because people thought that there might be a reference to the MMC. Who raised the bogey of the reference to the MMC? It was being urged by Rowntree and by the Labour party. If it had the effect on the share price that the hon. Member for Dagenham claimed, it was caused by those like himself who were agitating for a reference to the MMC. To duck the issue and say that we should have referred the bid to the Monopolies and Mergers Commission just in case is absurd.
The advice of the hon. Member for Dagenham is not as bad as the appalling investment advice given by the leader of his party to Rowntree workers. It was unattractive that the Leader of the Opposition should lecture Rowntree workers about whether they should sell their shares. The reaction of the trade union and of the work force in York, Halifax and elsewhere has been more sensible than that of the Labour movement. The unions are discussing the matter seriously. They are putting their views to those making the bid and they are making representations to the shareholders. That is how the matter should be resolved.

We should leave it to take its course. I do not believe that there is any case for taking a political decision to refer this to the MMC in the belief that a response to the kind of lobbying to which the hon. Member for Dagenham has been victim is a more sensible way of sorting out the problem.

Mrs. Alice Mahon: The rather arrogant contribution of the Chancellor of the Duchy of Lancaster, which trivialised a serious debate affecting 3,000 of my constituents, exposed the Government's total lack of a coherent policy for industry. It equalled in callousness only the refusal of the Secretary of State to intervene or to do anything to allay the fears of people in my constituency. The message came across loud and clear that the Government could not care less about British industry and the people who work in it. The message has been clear—shareholders' greed and short-term interest rule. In the near future, we will see a repeat of what happened in the early 1980s, when in my constituency thousands and thousands of manufacturing jobs were thrown away.
I should like to take the Chancellor up on his latter remarks about the unions. The trade union members who decided to plead for a friendly takeover were doing so out of sheer desperation. They were not trying to accommodate the Government or big business.
The disgraceful statement by the unelected Secretary of State for Trade and Industry that he did not see any reason to be concerned about jobs will be long remembered. If that cannot be used as a criterion to protect jobs in all constituencies, I wonder what the Secretary of State thinks should be a criterion. It is ironic that just over 12 months ago I made my maiden speech on manufacturing. I pleaded with the Government to formulate a policy and to take a responsible attitude to the thousands of people who work in manufacturing. We have had the answer in recent weeks.
This is the tip of the iceberg. I am in the unfortunate position of representing a constituency where takeover and merger have already reared their heads. With respect to my hon. Friend the Member for Dagenham (Mr. Gould), I cannot think too kindly of Sir Hector Laing and his utterances, because the events of recent weeks have shown that he is not a friend to industry. The Chancellor of the Duchy talked about inward investment. Sir Hector Laing and United Biscuits have singularly failed to make inward investment in Halifax. We are faced with the imminent closure of a factory and the loss of 1,000 jobs in KP Foods due directly to the fact that United Biscuits feels that because of 1992 it has to slim down to be more competitive. Yet the factory in Halifax increased its profits last year; it is a profitable factory and there is no good reason to close it.
However much the Chancellor of the Duchy trivalises the matter, from hard and bitter experience we are concerned when the headquarters of a company move out of the country. We know that, in any period of contraction, the so-called branch factories in other countries are the most vulnerable, and it becomes a case of out of sight, out of mind. The Chancellor of the Duchy should tell the House what his policies are for manufacturing.
Jobs will disappear not just in towns like Halifax, which the Government seem to have abandoned totally, but also


in the so-called golden triangle of the south-east, as 1992 approaches. The Minister should tell the House what he intends to do about it. It will cost him dearly because that is where much of the Government's majority comes from.
I have talked to trade unionists and to people who work in the industries which will be adversely affected. People are beginning to understand the shallowness of a Government who allow a free market to decide whether they will have a right to work or whether they and their families will have to exist on benefit, without the right to work in the foreseeable future.
Then there is the almost cavalier way in which the City talks about this devastating decision. The aggressive term "dawn raider" is understood now in Halifax, because two more companies will shortly he shedding labour. The Reliance hosiery factory, which is part of the Corah group, is holding its breath. In Leicester, 600 jobs are to go and there will be up to 60 more redundancies this summer in the factory in my constituency. Coloroll is breathing down the neck of one of the last carpet manufacturers in Halifax. This is all because of the merger madness of a few wealthy people who want to make a lot of money and who do not care about anyone else.
All this is happening in spite of the fact that Halifax tried to drag itself up. We have been held up by Conservative Members as a model of ingenuity and entrepreneurial spirit. The Prime Minister praised us to the hilt recently when she paid a visit—albeit a clandestine one—to Halifax. She did not inform anyone that she was coming, but sneaked in and out. She held up Halifax as the focus of the long-term partnership of business with the community, launched with royal patronage and embraced with enthusiasm by everyone. We feel betrayed. Some of us were not taken in, but the vast majority will not be taken in again by candyfloss schemes and people like Sir Hector Laing who profess to care about the community.
The Secretary of State and the Chancellor of the Duchy could have helped. They could have taken their responsibilities seriously. God knows, they are paid enough and they have enough privilege in their position. But they have decided not to do anything. The Chancellor of the Duchy has decided to abandon industry. He says that there is no hope. All he did this afternoon was try to score cheap party political points.

Mr. Bermingham: Does my hon. Friend agree also that the Chancellor of the Duchy was perhaps a little economical with the truth when, in outlining the openness of British policy, as well as not allowing anyone to intervene, he refused to explain why the Treasury Solicitor was briefed to try to warn off the trustees of the Rowntree trust who seemed to oppose the bid?

Mrs. Mahon: It seems to fall very much in line with everything that the Government do. I thank my hon. Friend for his intervention, which is now on the record.
In view of his performance in this debate, and because of his totally irresponsible attitude towards the work force, the Chancellor has forfeited any right to continue to hold his high office. He should do the honourable thing and resign.

Mr. Conal Gregory: For several reasons, Rowntree is an important company. First, it is a vital part of the manufacturing base in York. About 5,500 people

are employed there and that is one third of the city's manufacturing jobs. That is significant when one considers the reduction in jobs at British Rail Engineering Ltd. and the closure of Redfearn Glass in 1983, which once employed 1,000 people.
Secondly, Rowntree is important to the economy of Yorkshire. In that context, one looks not only at York but at Calderdale and Castleford. At Calderdale, 2,500 to 3,000 people are employed, depending on the season, and that represents an investment by Rowntree of over £20 million. Rowntree is the largest employer in Castleford, with 650 employees. The company has invested there in the largest chocolate-making factory in Europe and further development is likely.
Thirdly, the company makes an important contribution to the local economy. Rowntree has always encouraged its managers to participate in local affairs, whether in chambers of commerce, enterprise agencies or local schools. It maintains local charitable donations which are an example to any company. Specific examples could include the help for applied biology at York university and the Calderdale partnership of Business in the Community. Many examples could be given of Rowntree's commitment and philanthropy to the local community.
Fourthly, Rowntree has its world headquarters in the north of England and is one of six companies of similar size that are based there. Together, Rowntree and Cadbury account for just under 30 per cent. of world trade in confectionery. Finally and significantly, Rowntree employs just under 13,000 people in the United Kingdom confectionery industry. For those reasons if for no other, it is vital that we fully debate the Swiss bids for the company.
Referral of this case would have given a chance for these new issues, especially reciprocity and Rowntree's place in the market, to be given very careful thought. Secondly, it would have given time to review this test case on merger policy ahead of 1992, a matter to which my right hon. and learned Friend the Chancellor of the Duchy has still not fully addressed his mind. It would have given the Government an opportunity to sign the EC directive on mergers. These public issues have been raised by some of my hon. Friends and especially by the Community Member for York, Edward McMillan Scott, who is an example to his colleagues in the European Assembly. The Government continue to shy away from these issues.
In the short time available to me, I should like to speak about mergers and reciprocity. This is the first case that shows the European Community's vulnerabilty in promoting 1992 before it has the necessary framework.. I believe strongly in Europe and in Britain's place in it. It is an integrated trading bloc that is a natural market, and 1992 poses a challenge. Some British companies, such as Rowntree, are ready for it but some Governments are not. Britain has a useful strategy on mergers within the United Kingdom, but our nation has been slow in pushing for a European Community strategy.
If we are to remove the tariff barriers and other obstacles to free trade in the EC, our commitment must be mirrored by good bargaining. Aggressive bidders know that they are unlikely to succeed elsewhere in the European Community. The Swiss are particularly hostile because of their concern about exclusion from the Community. If we do not have a clearly defined policy on mergers that takes account of the size of companies, their share of the market and especially their potential for brands, then good


European companies will fall prey to further hostile Swiss bids. The picking off of a major confectionery company will be but the first of the British ripe cherries; pharmaceutical companies and others will follow suit. Today it is confectionery—the Polos and the Smarties—but tomorrow it will be pharmaceutical brands. Despite good brands and good staff and its enviable record on research and design, Rowntree has become vulnerable to the Swiss.
The answer to the problem lies partly in the European Community, which has a proposed regulation on mergers. It would require prior vetting of mergers where global turnover was in excess of £700 million and where the market share in the Community exceeded 20 per cent. Two states, Britain and France, have resisted that mergers policy. For five years, both have resisted a wider merger policy. If such a policy had been in place before these hostile bids occurred, the competition policy and reciprocity could have been examined by the Commission.
That brings me to the second vital area—reciprocity.Britain has a tradition of free and fair competition. We are a trading nation founded on free trade and not on one-sided cricket. We are still waiting to see examples of United Kingdom companies that have succeeded with a hostile bid in Switzerland. I would be quite happy to accept an intervention by my right hon. and learned Friend if he can give one example of a United Kingdom company that has succeeded with such a hostile bid. I shall be more generous and invite him to give an example of any European company that has succeeded with a hostile bid in Switzerland. I see that his special advisers are singularly unoccupied in scribbling an answer to that question, because there is no answer. They cannot find an example of a company that has succeeded in such a bid.

Mr. Kenneth Clarke: Would my hon. Friend say that any company which is proof against a hostile bid should not be allowed to take over another company? Would he apply that logic to companies such as Trusthouse Forte, P and O, Great Universal Stores and so on? Would he apply it to companies of any nationality? How does he imagine that the Monopolies and Mergers Commission would deal with the flood of work that would result from referring every such case?

Mr. Gregory: In cricket, there are certain rules and regulations which the two teams use when they go out to play. If my right hon. and learned Friend will bear with me, he will see that in this case we are playing with different rule books and are not comparing like with like. I can find no instances of such bids succeeding in Switzerland; that is partly because it is almost impossible for a United Kingdom bidder in Switzerland to have shares registered by the Swiss banking fraternity.
The Swiss have recognised their one-sidedness in this matter. To their embarrassment, they brought forward in February 1983—at about the time when we were looking at European merger policy—a Bill to restrict Swiss companies from blocking foreign shareholdings and hence foreign bids. That legislation is still lurking in the Swiss legislature. Why were these wider issues not considered by the Office of Fair Trading on the referral of the Nestlé bid for Rowntree?
I would be less than honest with the House if I did not address the question why the Labour party has tabled the motion. The Labour party has been diversive and unhelpful in this discussion, and I shall give two illustrations. The citizens of York have experienced the appalling effrontery of a Socialist Front-Bench spokesman coming to our city to urge Rowntree to throw in the towel. York needs no lectures from the Socialists. It was incredible that such a call should have been made, particularly when the work force were on holiday.
Furthermore, the Socialists in Europe chose to vote down a debate on Rowntree and instead discuss the subject of the middle east. That shows the polarity on this matter and shows that the Socialists are using the example of Rowntree, yet are not consistent in their arguments.

Mr. Eric Martlew: rose—

Mr. Gregory: Let me move to another issue that should be addressed, that of small shareholders, many of whom have inherited shares or earned them as a result of their work for Rowntree. I received a letter from Edinburgh which said:
A takeover will have … substantial effects on a family which we do not want and are not in a position to take planned action within normal tax legislation following the sale of shares i.e. liabilities to capital gains and subsequent inheritance tax. These arise because the main contenders are Swiss and are unable due to Swiss legislation to offer voting shares to the value of their offers. The cash received by my father on compulsory sale will therefore be liable to capital gains assessment and as a result of his age the remainder of the family will suffer by the imposition of inheritance tax as the added sale value arising from the bid increase may just take his estate above the exempt limits.
It therefore appears to the family that the Government has a vested interest in the success of a bid from the Swiss in raising substantial amounts of additional taxation from long term pensioner interests. On a rough calculation, in my father's case, a bid of £10 could be worth as little as £6 a share. The Government taking £4.
Those remarks were made with some concerned detail about an individual pensioner on behalf of his family.
Finally, now that Suchard has made a bid for Rowntree, will the Government recognise the wider implications and refer the matter to the Monopolies and Mergers Commission? The breathing space would allow Britain to sort out its true mergers policy, its long-term considerations to the north of England as a site for manufacturing headquarters and its commitment to this country as the capital fount of major industry rather than to allow a major firm to become the satellite of a Swiss raider.

Mr. Malcolm Bruce: The hon. Member for York (Mr. Gregory) has put his finger on a number of pertinent issues relating to the bids for Rowntree. He, I and many others still find it incomprehensible that no reference has been made to the Monopolies and Mergers Commission so that the issues can be examined.
It is worth referring to the Blue Paper that the Chancellor is so proud of because it helps us to develop an argument as to why a referral should have been made. Under the Fair Trading Act 1973, the enhancement of market share by a takeover and merger is a factor. The paper specifically states:


Actual or proposed mergers (including partial shareholdings) qualify for consideration under the Act if they create or enhance a 25 per cent. market share or if the value of the assets taken over exceeds £30 million".
Rowntree currently has 26 per cent. of the United Kingdom confectionery market, so it seems that there is justification for referring any bid by any other confectionery company based in the United Kingdom, the European Community or elsewhere. The Nestlé or the Suchard bid would raise the share of the combined company to between 28 per cent. and 29 per cent. of the United Kingdom market.
The hon. Member for York was right to point out that that is the only area in which the Government have an established policy. They have been trying to block any development of a European-wide mergers policy, while at the same time using an expensive advertising campaign to tell businesses to be ready for 1992, but not listening to their own propaganda. Clearly the Government have no intention of preparing a policy for 1992. If Suchard were to take over Rowntree, its combined share of the EC market would be 24 per cent. A merger with Nestlé would produce a share of 20 per cent. Both would be over the agreed limit for referral under the European rules, which the Government have refused to support. That is an immediate sign that under rules currently being discussed within the European Community that bid would be referred, yet the Government have refused to do so.
The Secretary of State cannot hide behind the fact that the Office of Fair Trading has no grounds for referral—as he has tried to do—because the legislation makes it absolutely clear that:
The decision whether or not to refer a qualifying merger to the Monopolies and Mergers Commission for investigation is the Secretary of State's.
He does not have to take the advice of the Office of Fair Trading.
In the Blue Paper the Government stated that those people who believe that other issues such as employment, regional issues, research and development, highly leveraged bids and foreign takeovers including reciprocity should be taken into account should be heeded. Nevertheless, they concluded;
Normally, therefore, the decision should be left to the market.
Clearly, that is the line that the Government are taking, as the Chancellor of the Duchy has told us today. When the Secretary of State announced that there would be no referral, he said that the shareholders should be left to decide the issues raised.
That position represents an abject surrender to the stock market, and a refusal by the Government to accept responsibility in such affairs. Shareholders cannot be expected to decide whether the headquarters of a company in York is a critical factor, nor can they be expected to decide about employment practices or any other factors. They are certainly not interested in whether the bid will be in the consumers' interest. Their interest is how much money they will make on the deal, and that is all they can be expected to consider. The Government are refusing to accept their responsibility and have shown a failure to understand that their commitment to free enterprise is not valid unless they are also committed to ensuring that it is fair.

Mr. Leigh: Does the hon. Gentleman agree that, with United Kingdom listed companies deriving some 45 per cent. of their profits from foreign operations, there is

nothing for this country to gain by indulging in economic nationalism? If the answer to that is yes, how does the hon. Gentleman equate his comments with the traditional stance of the Liberal party on such matters?

Mr. Bruce: I believe that an open market is a desirable proposition that should be encouraged, but it is important that the same criteria apply to all the players in the market. The hon. Member for York made that point quite effectively. The argument that I shall develop is that equal opportunity to participate on the same basis is not available.
The next issue that must be tested is what motivates a takeover in the first place. The DTI's own paper shows that the motivation is very often that of unsuccessful large companies seeking to take over their irritatingly successful competitors, which are often smaller and more vulnerable. Submissions from Rowntree prove that point, as its brand shares are increasing and Nestlé's brand shares are declining dramatically within the United Kingdom market. There is plenty of evidence. Research carried out by the DTI reveals that, even in terms of improved profitability after merger, the general performance was poor. It makes the final point that that is
a weak test of efficiency gains because mergers may produce higher profits through the exploitation of increased market power.
In other words, very often the attempt to secure a degree of monopoly is the prime motivation for mergers, and that is why a reference to the Monopolies and Mergers Commission is normally desirable for mergers on such a scale.
The DTI paper acknowledges one factor that is highly relevant in this case—the issue of reciprocity. The paper says:
One consideration that may be relevant in some cases is the extent to which United. Kingdom companies have reciprocal freedom to acquire companies based in the home country of the prospective acquirer.
The Chancellor of the Duchy and the Secretary of State have chosen to dismiss that argument as not proven and not even worth investigating. The Government stand indicted in that respect.
There is no doubt that Swiss companies are not open to hostile takeovers as are United Kingdom companies. The Chancellor of the Duchy acknowledged that the practice is different because the structure of the two economies is fundamentally different. Switzerland is outside the EC. It does not contribute to the EC, but it is anxious to participate in our single market after 1992. It operates a system that makes it extremely difficult for us to take a stake in its economy.
I shall quote somebody who may have more authority with the right hon. and learned Gentleman—Lord Plumb, the President of the European Parliament. He said:
I met the chairman of Rowntree plc and I was most concerned by what he had to say. Trans-national mergers will become much more common in the next few years, a fact well recognised by Rowntree's directors, but it must be remembered that Switzerland is not part of the EC and does not itself entertain hostile bids from abroad for its companies.
It appears that the Government are at odds with Lord Plumb on this issue.
The House should dwell on the simple fact that Switzerland is essentially a banking economy. Manufacturing is not its life blood. It invests in overseas companies and uses the banking community. [HON. MEMBERS: "Provide evidence."] It is in the interests of the


Swiss, having made such investments, to ensure that they are protected. That is why they restrict the voting rights on shares—it makes sense for them.
Because the Swiss attract so much in deposits from overseas, they have access to investment funding which is not so readily available to British or EC-based companies that must ensure that they have shares with which to raise money on the stock market. The two economies therefore follow divergent paths.
There may not be conclusive proof, but there is sufficient evidence to warrant closer investigation into the extent to which the partnership is equal. This affair, and one or two other recent ones, such as the merger of British Airways and British Caledonian, which was badly mishandled by the Government and disgracefully handled by the MMC, suggest that it is time that rather more thought was given to what criteria should be applied when takeovers are proposed.
The Department of Trade and Industry's evidence shows that the motivation for merger is often the desire to acquire insulation from competition, not the desire to exploit it. The criteria for a reference to the MMC should therefore be changed so that, when there is a hostile bid, the onus is on the bidder to prove that the merger is in the consumers' interest. At the moment, the company being bid for has to prove that the merger is anti-competitive. That is always much harder to prove.
The Chancellor of the Duchy dismissed regional considerations in a cavalier fashion, but they are important in United Kingdom and EC terms. The right hon. and learned Gentleman could at the very least acknowledge that, after referral, even if the bid goes ahead, it must do so on the basis of assurances about Rowntree retaining its corporate headquarters in York and substantial financial autonomy.
I find it extraordinary that, in this modern and diversified age, the Government still insist that the shareholder is sovereign. When a company of this size is involved, the work force should be taken into account. I have consistently argued that workers are entitled to be consulted on strategic considerations. If a company that wants to take them over cannot persuade them that there is an attractive and positive future, that should be taken into account.
The fact that the Swiss are making the bids and that they are outside the EC is relevant. It is not right that they should be able to sit behind the barricades and pick ripe cherries. By failing even to refer the matter so that it can be evaluated properly, the Government are advertising to the world the fact that there are ripe and juicy pickings in Britain just waiting to be plucked.
An open market brings benefits, but it is vital that stall holders and customers know that there are rules of fair competition and that they will be enforced effectively. Reciprocity must be comparable. The onus should be on the predator to prove that there is an advantage to the consumer from merger, and regional considerations and the rights of the work force should be taken into account. I am not saying that any one of those issues should block a bid, but they should be taken into account. The fact that the Government have brushed them all aside and are letting shareholders, the market, the City and institutions

decide shows that they are unaware of their responsible role, which is to ensure that the market operates freely, fairly, honestly and openly.

Mr. Michael Grylls: I hope that hon. Members will not challenge my free market credentials. I do not want to waste the time of the House going through them, as this is a short debate.
We have to consider some of the wider issues and the paradox of how to regulate a market to ensure that, while it is not a total free-for-all, it is relatively free and fair. All Conservative Members believe ultimately in the free market, but we recognise that there has occasionally to be regulation, even when we are deregulating when regulation is unnecessary. It is a difficult hurdle, but we must cross it.
Few hon. Members would say that there should be a free-for-all and absolutely no regulation in competition policy. I hope, however, that we all agree that there should be a minimum of regulation to establish as fair a market as possible. That must apply to Britain and to the EC.
The debate is not about challenging international investment, which is clearly good for countries in the free enterprise system. As my right hon. and learned Friend the Chancellor of the Duchy said, Britain has benefited enormously, is still benefiting and will continue to benefit from investments we have made in countries such as the United States and in Europe.
I hope that we are not challenging whether there should be foreign investment here. It is obvious that we have benefited from jobs and wealth creation which are the result of overseas firms investing here. Our firms have gone into Europe and created wealth and jobs.
My hon. Friend the Member for York (Mr. Gregory) has understandably put up an honourable defence of an important company in his constituency. Few hon. Members who try to look after what they perceive to be the interests of their constituents would criticise him for that. Nevertheless, I must say with the greatest possible respect that, bearing in mind the wider interests, the issue of Rowntree is not really about regional policy or even about creating jobs, because one can make a strong case, on the basis of Nestlé's record, suggesting that jobs in York will not be damaged.
My right hon. and learned Friend said that ultimately the issue was competition. It is the duty of a Secretary of State for Trade and Industry to consider the effect of any proposed merger on competition in a market. That must be the balance of his judgment. On the facts presented to him, it probably was not possible to make a sound case for referring the merger of Nestlé and Rowntree, as it had such a minimal effect on the increased concentration of the confectionery market in Britain.
We should be thinking about how we deal with concentration in the EC market, consistent with wanting, encouraging and believing in foreign investment. The United States has an anti-trust policy. Many of our companies wishing to invest in the United States have had to get round it. Many have failed because, under the anti-trust legislation, the Americans have said no to British or foreign investment that was against the interests of competition policy.
The Japanese have no tradition of company takeovers. There have been few examples of overseas firms buying into Japan, but no doubt that will happen in the future and


Japan will have to consider its competition policy. The third industrial bloc in the world, the EC, will, as we approach the magic date of 1992, have to think about concentration in each of its market sectors. We cannot buck that issue.
My hon. Friend the Member for Amber Valley (Mr. Oppenheim) has mentioned 1992 and the fact that we are now in the Common Market. We must try to ensure that each market sector is not so dominated by giants that it becomes difficult for new entrants to keep the market sector alive.

Mr. Phillip Oppenheim: I realise that the mere mention of 1992 elicits knowing nods from everyone, but I do not see what it has to do with the Rowntree takeover. Surely the European confectionery market has been liberal and relatively free for some time. One does not have to acquire an EC confectionery company to gain access to EC markets.

Mr. Grylls: I do not necessarily disagree with my hon. Friend. I was trying to broaden the debate—the terms of the motion are fairly broad—into competition policy of the EC as a whole and what we must do in each market sector.
The confectionery sector in the EC is already fairly concentrated. Six major firms—three from Great Britain and three from the continent—control 70 per cent. of the confectionery market. I am not saying whether that is right or wrong, but there is room for judgment whether six companies controlling 70 per cent. of the market is excessive concentration. We shall have to think about that matter in future, as mergers take place. If the Rowntree merger takes place, there will be not six but five firms controlling 70 per cent. of the market. We must ask, should that be allowed?
Ministers will have to consider a merger directive when they attend a meeting of the Council of Ministers on 22 June. I detect—I congratulate the Government on this—a movement from the rather negative attitude that earlier British Governments, including this one in their early years of office, took to the merger directive. They said, "We want to run it our way and do not want anything to do with a European directive." That change of attitude is welcome and sensible.
The Economic and Social Committee of the European Community has given its opinion of the latest edition of the merger directive that has been laid by Mr. Peter Sutherland. I shall quote from it because it clearly spells out what we must consider if we are to maximise competition and achieve success in the market. The opinion of the Economic and Social Committee says:
In the Community itself the interdependence of economies which has developed makes it necessary at least to consider the European dimension of markets in assessing planned concentrations. In its Opinion on the Commission's 15th Report on Competition Policy the Committee stated that `The continued existence of national economic areas is an anachronism when it comes to achieving a sufficient degree of real competitiveness'. The Committee continued: 'The smallest possible geographical yardstick is now the Community, and even then the world dimension cannot be disregarded.'''
I passionately believe that there must be maximum competition in the different sectors of the EC in which our businesses operate. Indeed, it is vital to the success of the

European Community as a market that that should happen. We should not allow over-concentration in any market sector.
If I might be so bold as to leave my right hon. and learned Friend with a message. it is that we must consider this matter in a European way. We must consider each market sector and avoid excessive concentration. If not, it will militate directly against the successful work that the Government, above all, have done in encouraging the creation of new businesses and jobs. If the market is over-concentrated, new businesses will not start up. That is not only my view but that of most people in the European Community.
The economies that have been most successful in the past, such as Germany and France, have been conscious of avoiding over-concentration. Germany, partly because of her history, took a strong view after the war that she did not want concentration of her industry. Since the war, Britain has seemed to go the other way. We have allowed growth by acquisition rather than organic internal growth in our companies. I hope that that will change, but we must watch it and consider every market sector.
If economic progress is anything, it is surely the process of selection from alternatives. We must ensure that there are sufficient alternatives in each market for the public to have a choice. I hope that, when our Ministers attend the Council of Ministers' meeting on 22 June, they will have an open and constructive mind and try to agree a merger directive. It is no good going to the meeting half-heartedly and saying, "We want what we have always had in this country." That will not do. We must look anew at the Community as a market and ask how we can maximise competition. If Ministers do that, we shall achieve the right directive and strengthen the European Community business market for the good of future generations.

Mr. Doug Henderson: I am grateful for the opportunity to take part in the debate. I have a strong constituency, union and, I confess, consumer interest in this matter.
Other Labour Members have referred to reciprocity and competition, so I shall not say anything further about them. I should like to discuss employment. When we initially debated this issue on 25 May, the Chancellor of the Duchy of Lancaster said there were no employment grounds that justified a reference in this case. He has repeated that today. It is disingenuous of the Chancellor to argue that case because, in answer to the private notice question on 25 May, he said that open markets were best. I put it to the Chancellor—I think that some of his colleagues have already started to put it to him—that the real position of the Government is that they believe that there are no employment grounds in any case that would justify a reference to the Monopolies and Mergers Commission.
If the right hon. and learned Gentleman believed that the implications for employment were a legitimate reason for a reference, he would recognise that there are 13,000 jobs at risk in the industry, mainly in the north of England. There are 1,000 people in my constituency, managers arid workers alike, who believe that the takeover bid by Suchard or Nestlé would put their jobs at risk. The right hon. and learned Gentleman would also recognise that all those people have been left out in the cold.
I can clarify the latest union position. The main union, the General and Municipal Boilermakers and Allied Trades Union, and the union in Halifax, the Transport and General Workers Union, take the same view. They want Rowntree to run its existing production plants in the United Kingdom. They feel that they have been sold down the river by the Government. They have an obligation as a trade union negotiating committee to continue to discuss and negotiate with every potential buyer of the company. That has not changed in the past week, and it has been the union position throughout. All the potential bidders have been asked whether they can guarantee the jobs and a headquarters in the north of England. Those bidders have not been able to give such a guarantee.
I hope that the Chancellor will recognise the importance of a reference to the Monopolies and Mergers Commission. He said that there is no need to refer the issue, because the decision of the commission would be to endorse a possible takeover. He should put that to the test. All the workers in the industry want that to be put to the test.

Mr. Keith Vaz: Will my hon. Friend give way?

Mr. Henderson: I cannot give way to my hon. Friends, because I do not intend to give way to Conservative Members. I must be fair.
Surely the workers have a right to put their case. Is it not their efforts, skill and expertise that have made Rowntree plc a strong company, with strong products, high productivity and improving profitability? It has doubled the profits in Europe in the past year and is now a sitting duck for all foreign predators. Workpeople in manufacturing companies up and down the country must be wondering whether it is their turn next. We need new legislation to give workpeople a say.
Clearly the threat to competition from increasing monopoly does not count with the Secretary of State. The same is clearly true in relation to the asset value, mentioned by the hon. Member for Gordon (Mr. Bruce). Where either of those conditions are met, in relation to the proportion of market share or in relation to asset value, the workers should have additional rights. Workpeople should be able to initiate a ballot among themselves to decide whether they should have a chance to have their case heard by the Monopolies and Mergers Commission. If it is good enough for workpeople to be compelled to have a ballot when industrial action is contemplated, it is good enough for workpeople to have a ballot when capital action is threatened, as in this case.
I want to make it clear that I am not arguing a syndicalist case. It is not a question of the workers having a right to determine what happens ultimately, but their case should be heard.
There is no doubt that the Government have misjudged public feeling. The workpeople are against the takeover. The president of the Confederation of British Industry, Mr. Banham, has stated publicly that he believes that there is a need for an investigation so that all parties can put their case. Consumers, in their correspondence to local newspapers up and down the country, are clearly in favour of a reference so that the arguments about competition

may be heard. Also, 60 Conservative Members have signed an early-day motion saying that they believe that there is a need to have all the arguments out in the open.
I urge the Government to bury their dogma, recognise the depth of opposition to what they are doing and give all parties a chance to put their case to the Monopolies and Mergers Commission.

Mr. Neil Hamilton: I listened with care to the hon. Member for Dagenham (Mr. Gould) when he opened the debate. Unfortunately, he has just nipped out for a Kit Kat but I am sure that as soon as he sees my name on the screen he will be back. He had quite a nerve to castigate the Government for a lack of clarity in their competition policy. We had no guidance from him as to what criteria the Labour party, if in government, would employ in deciding whether to refer a case to the Monopolies and Mergers Commission. We know that the hon. Member for Dagenham is the architect of the perestroika within the Labour party at present and the only certainty about its policy is that what was policy yesterday is not necessarily policy today and what is policy today may not be policy tomorrow.
The hon. Gentleman is desperate to create a voter-friendly Labour party to bring it back into government. We know that there is a sort of Boston tea party of dogmas being ditched overboard. Before the previous election the Labour party had to accept that it would still have to support the sale of council houses. There were certain trade union reforms that it could not repeal and it had to accept that nationalisation was a dead letter. I believe that it has now announced that our tax cuts will not be substantially reversed and that its unilateral policy has been dumped. Also, in spite of the hon. Member for Dagenham's remarks about British sovereignty being lost, the Labour party has now been forced to accept that we will remain within the EEC. Who knows? It may come to believe in a free movement of capital and inward investment, like the Labour party in New Zealand.
The hon. Member for Dagenham is in a slightly delicate position. He based his speech on the complaint of foreigners coming to Britain to take over cherished national institutions. It so happens that the hon. Gentleman was born far from these shores and I believe that he may have some designs on taking over the Labour party. He certainly wants to try to improve its performance and make its product more saleable. The list of changes in policy that I have just given shows the benefit of the hon. Gentleman to the Labour party in the intellectual free flow of capital. That is exactly the sort of argument we are employing in relation to this bid and the policy in regard to takeovers by foreign companies. I doubt whether the hon. Member for Dagenham could make the Labour party as palatable to the British electorate as Rowntree's products are to me.
I wholly endorse the decision of my right hon. and learned Friend the Chancellor not to refer the proposed takeover to the Monopolies and Mergers Commission. That decision is a welcome stand against arbitrary political interference in industry for chauvinistic reasons. I welcome the emphasis on competition that has now succeeded in our merger policy. It is certainly a great change from the disasters we have seen in the past. It is not long ago that Labour Members were doing everything they could to


encourage mergers and industrial reorganisation, co-operation and so on during the 1960s. Big was certainly better in those days. We learned something from our disastrous experience then. It is equally wrong for the Labour party to take the dogmatic view that it now takes.
The Government have been quite correct to listen to the Director General of Fair Trading, Sir Gordon Borrie, who is certainly not one of our friends in the City or a political confederate of this Government. Indeed, Sir Gordon Borrie is on record as saying that he doubts the value of mergers in the first place because they do not
necessarily bring about the most efficient deployment of and development of the assets which … shares represent.
In spite of Sir Gordon's political views, which may be different from ours for all I know, and in spite of his doubts, he has not seen fit to advise the Secretary of State to refer the proposed merger to the Monopolies and Mergers Commission.
As has been announced, there are no competition grounds for referring the bid. The hon. Member for Dagenham was quite wrong to say that Nestlé sought to eliminate a powerful rival in confectionery. The figures belie that assertion. Cadbury has 30 per cent. of the market, Rowntree 26 per cent., Nestlé only 3 per cent. and Suchard only 2 per cent. How can Nestlé's 3 per cent. constitute a powerful threat to Rowntree or vice versa? Of the 40 leading brands of chocolate and confectionery, Rowntree has 11 and Nestlé and Suchard have only one each. Given those figures, how can the powerful rivalry referred to by the hon. Member for Dagenham arise?
The truth is that Nestlé is a broadly based food product company whereas Rowntree is principally a confectionery company. Those two elements—to some extent contrasting elements—fit neatly together. I express no views on the likelihood of the merger taking place or as to whether it would be good or bad for the shareholders or employees of the company because I do not know enough about it. I would merely say that the Nestlé company has been in this country for about 120 years and operates with considerable responsibility. It employs 10,000 people in this country—some of them, I believe, in the constituency of the hon. Member for Great Grimsby (Mr. Mitchell), who is sitting on the Opposition Front Bench.
Let us consider the regional argument. I understand that Nestlé has just over 4,000 employees in the south, nearly 4,000 in the north and more than 1,000 in Scotland, so the majority of Nestlé's employees are not in the south but in the north. Why should we fear for jobs if Nestlé is successful in its takeover bid? As an hon. Member representing a constituency in the north-west, I have no fear of multinational companies. Thousands of new jobs have been created in the north-west—in the county of Cheshire in particular—with Marks and Spencer, Shell and Barclays bank all coming to our part of the world because they know that the quality of life is better and that one can have a higher standard of living because one does not have to spend so much on property.
The brands that Nestlé sells in this country are well known to everyone, although people may not know that Nestlé owns them. Findus, Crosse and Blackwell, Sarson's, Libby's and Carnation are all well-known brands. On the basis of Nestlé's experience in this country, there is no reason to believe that if it succeeded in taking over Rowntree it would close down operations or move factories and products elsewhere. Being one of the most advanced and successful capitalist economies in the world,

Switzerland has very little unemployment. Therefore, I fail to see how one can argue that jobs would move to Switzerland; there are no unemployed people to take on the new jobs. I hope that in due course we shall overtake Switzerland as one of the most advanced capitalist economies in the world.
If hon. Members had to choose a drinking water to consume, would they choose Perrier or Ashbourne? If one took the chauvinist view of Opposition Members, one would choose Perrier because Perrier is owned by a British company. One would not choose Ashbourne water because, with due respect to my hon. Friend the Member for Amber Valley (Mr. Oppenheim), it is owned by a foreign company, Nestlé. That shows the absurdity of Labour Members' chauvinist arguments.
As for the argument about reciprocity, we know very well that Ministers in Switzerland do not have the powers that the Secretary of State for Trade and Industry has to block mergers and prevent takeovers. It is true, as a matter of practicality, that companies in Switzerland by and large protect themselves against hostile takeover bids. Most European countries erect barriers against hostile and unwelcome takeover bids. I believe that the Leader of the Opposition is erecting barriers against unwelcome and hostile takeover bids at the moment. I believe that shortly one will have to have 25 per cent. of the voting shares in the Labour party in this House before one can have the temerity to stand in an election for the leadership. That shows the hypocrisy of Labour Members.

Mr. Tristan Garel-Jones (Vice-Chancellor of Her Majesty's Household): He is foreign.

Mr. Hamilton: My hon. Friend the Member for Watford (Mr. Garel-Jones) points out that the Leader of the Opposition is foreign but, as we are all three Welshmen, we all suffer from that disability.
Takeovers and the threat of takeovers are a vital part of the competitive process and can be a significant part of the engine of growth of a capitalist economy. We have been seduced by the arguments that came out of the Cambridge school of economics in the 1930s about perfect competition and the static equilibrium analysis. We have been led up a blind alley by that. Markets are a dynamic discovery process, as Professor Hayek and the Austrian school have pointed out. If monopoly profits exist, they are essentially temporary because if there are no legal barriers to entry into the market there is a stimulus to imitation and improvement. The threat of takeover, even if it is not realised, is another discipline leading to efficiency. Nearly all companies, regardless of their size, are susceptible to takeover bids, except perhaps the big oil companies or companies of the size of British Telecom. With reverse takeovers, even the large companies are no longer immune to the threat of being taken over.
I know that the hon. Member for Gordon (Mr. Bruce) speaks with some feeling about mergers and brings to the House a special and rather painful experience. In his experience, not all mergers are successful; they do not all live up to the prospects held out for them. I do not dissent from that. The hon. Member for Dagenham devoted considerable time to that point in his speech. He observed that not all takeovers increase efficiency and drew attention to a number of academic analyses to prove it. But that is not the point. Most important are the unobservable and immeasurable gains that come from the


threat of takeover as a spur to efficiency—the submerged iceberg of generalised efficiency gains in companies kept up to the mark by the existence of takeover bids.
In conclusion, I make three brief points. First, in competition policy generally, we should move away—I say this with respect to my hon. Friend the Member for Surrey, North-West (Mr. Grylls)—from the rather crude indicator of size of market and size of company towards a system that reflects the European practice of cracking down on an abuse of a dominant position rather than simply objecting to that dominant position. The use made of power rather than the nature of the power itself is the essential element on which we should concentrate.
Secondly, I believe that the Government in general are incompetent to devise—[HON. MEMBERS: "Hear, hear."] Labour Members had considerable experience of incompetent Governments when they were in office. Things have changed somewhat since. We recognise our limitations and, as Labour Members know, we are trying, so far as possible, to abolish government.
The Government are incompetent to devise a correct market structure for successful business. Markets are not perfect but they are less imperfect as controlling forces than government. Markets correct more reliably the imperfections in the economy. There is no evidence of which I am aware that the Office of Fair Trading, the Monopolies and Mergers Commission or the Government generally have made better decisions than would have been made if matters had been left to the market. We have had a huge collection of changing criteria underlying monopoly policy over the years. One minute the criterion is competition, the next it is reciprocity, then it is a regional consideration. Sometimes the criterion has to do with the person taking over. I object to people like Robert Maxwell, who is not averse to setting up barriers to taking over his company, which is based not even in Switzerland but in Liechtenstein. I do not hear much criticism of that from Labour Members.
My third and last point—[HON. MEMBERS: "Hear, hear."] I am listening to myself and I like what I hear, which is more than I can say when Opposition Members are on their feet. Notwithstanding the general point about the value of the threat of a takeover, companies should be allowed to defend themselves against takeover if the shareholders are willing to pay the price—something that happens in Switzerland. My hon. Friend the Member for Surrey, North-West made a good point about that the other day when my right hon. and learned Friend the Minister of Trade and Industry made his statement.
There can be a problem when a short-term drop in profits results from investment in research and development and in improving organisation and efficiency, the rewards of which may not be felt until some future time. At that stage, it is possible for a predatory takeover and the rewards of effort and entrepreneurship may not fall to those who deserve them. All manner of exotic devices have been invented to avoid that—golden parachutes, shark repellent, pacmac defences, greenmail and so on. I do not have time to explain that, but shall leave it to my hon. Friend the Member for Darlington (Mr. Fallon) who is more of a details man than I am.
Companies are restricted by the takeover code during the bid period. The inhibitions upon the takeover

mechanisms have some cost to society and to the economy in general, although that is justifiable. Contracts providing for substantial delayed compensation for managers are very much the vogue, which has been hugely to the advantage of Britain. People such as Sir Ralph Halpern can earn enormous amounts of money on the back of creating vast amounts of wealth to be generally distributed throughout the country. Indeed, I see a large number of Burton suits on Opposition Members. It would be wrong for such rewards to be seized by predators. If shareholders are willing to pay the price, we must ensure that uncertainty does not reduce the incentives.
The Government have made a correct decision. The concentration on competition is the essence of the case and the Government are absolutely right to reject the hysteria, chauvinism and xenophobia of the Opposition's economic criticisms.

Mr. Denis Howell: I shall not attempt to follow the speech of the hon. Member for Tatton (Mr. Hamilton), who was extremely selfish in the amount of time that he took.
I wish to declare a few interests because each of them is an aspect of the Rowntree case. I am a trade union-sponsored Member of APEX. All the staff of Rowntree and Cadbury Schweppes are members of that union, of which I was president for 12 years. Continuing consequences of great importance for Cadbury Schweppes arise from the debate that we are supposed to be having about Rowntree, but to which few hon. Members have addressed themselves. I am president of the European Movement and chairman of the Labour Movement for Europe. Serious criticisms of the Government can be made from that standpoint, although many of my hon. Friends will not share my enthusiasm for the European cause.
The Minister's speech was one of the most disappointing that I have heard for a long time. I can best describe it as a speech with a hole in the middle—the hole in the middle where we should have heard all the considerations that we expected him to deal with, but which he singularly failed to address. Other than financial considerations, he had nothing to say about the interests of the work force, the consumers or the national interest generally. He actually had the impertinence to say that the Labour party was taking the country back into the last century and, by implication, that the Government were concerned with the wider interests. In fact, the opposite is true.
A century ago, all that mattered in industry was the ability to make a profit, and everything was judged by that criterion. Over the intervening 100 years, Parliament has had to decide, in almost every conceivable way, that the interests of the work force should be protected by legislation and that it would be fundamentally wrong to allow the interests of the shareholders unrestricted dominance over the interests of the work force. Many of those who have held office in the trade union movement tried to achieve a partnership between the interests of capital and the interests of the work force. Those who invest their working lives in industry are as important as those who invest their capital.
The Prime Minister, on one of her high moral days, tried to tell us that the ability to create wealth was most important. Wealth is created by the work force applying


themselves to the tasks that they are employed to carry out. I do not object to the Prime Minister's comments, because I know that it is the working people who create the wealth, and they have done so for as long as most of us can remember.
The protective legislation that I mentioned must be examined during any takeover bid. Section 309(1) of the Companies Act 1985 states:
The matters to which the directors of a company are to have regard in the performance of their functions include the interests of the company's employees in general, as well as the interests of its members.
The Government appear to be saying that during no part of the takeover process should someone have to prove that he intends to abide by the legislation of the land. The Terms and Conditions of Employment Regulations 1981 make it clear, especially in regulation 10, that there is a clear duty to protect the interests of working people during a transfer or takeover. I am not suggesting that Nestlé or any other company will not do that, but it must show that it intends to do so before any takeover is allowed.
I accept that the Monopolies and Mergers Commission might not be the appropriate body to examine the takeover—that is certainly the Government's case. However, they cannot simply say that the considerations of the work force and the consumers cannot be examined by the MMC and will not be the subject of any statement or consideration by the Government. Their attitude is that the only criterion to be considered is the sale or the transfer of shares. I understand that, on the continent, takeovers do not arise from the transfer or sale of shares—the purchase of the company is the essence of continental legislation. That is much more sensible than the Government's policy. It recognises wider issues than simply the sale of shares. As the hon. Member for Surrey, North-West ( Mr. Grylls) said, competition policy is important and we should know what is happening.
Speaking as a long-committed European, I have some prejudice against Switzerland or any other country outside the EC trying to obtain the best of both worlds. They are trying to have it both ways, which is fundamentally wrong and something to which I object. It is the Government's dury to address that question.
I know all about 1992, and I share the Government's view of getting ourselves geared up for the single market. However, I am totally opposed to gearing ourselves up to compete in Europe in 1992 by allowing countries which will not accept the obligation of EC membership all the advantages of membership from a trading point of view. Yet that is the very situation which the Government appear to be allowing in this instance.
Many other Governments would not allow such a thing to happen. This morning, I was told by Mr. Dominic Cadbury, chief executive of Cadbury Schweppes, that when his company recently bought a firm in France, Cadbury was subjected to considerable questioning as to whether it would, as a British company, remain in membership of the EC. The French were concerned about the hostile bid to which Cadbury had been subjected succeeding, the point being that if the control of Cadbury Schweppes were to move from this country, as a member of the EC, to the United States, the French Government would have intervened in order to protect European interests. That is something our Government have not even considered, and of which they do not take great

account. The Minister's statement on the question of reciprocity was almost irresponsible, so far as British interests are concerned.
It is essential that the takeover be referred to someone, to examine the situation in this country in respect of mergers, monopolies, and hostile bids within the scope of expanding European policies, 1992, and world corn-petition policy; as we know, the world is, from a business point of view, shrinking all the time.
The Minister has said nothing about Rowntree. It is entitled to an explanation. Rowntree is a special kind of company. Over the years, it has given over much of its profit to the social benefit of the local community. Will that practice be continued? Are the Government saying that they will not consider even that aspect? If so, it is incredible and disgraceful.
I refer also to Cadbury. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) has, as is often the case, made common cause with hon. Members for Birmingham constituencies on this side of the House, in the interests of that city. The money from the Bourneville Trust, as with Rowntree, has been controlled by people who have looked beyond their own self-interest to the local community and to society as a whole. That is a major factor and one that ought to be exercising our minds. However, it has not been mentioned once by the Minister today. Apparently, he does not consider it to be of any importance how Rowntree's profits are distributed and what relationship it has with the local community and the wider world.
The chairman of Cadbury Schweppes has told me, as he has no doubt told other hon. Members, that if the Government permit Nestlé's takeover of Rowntree, Cadbury will then be the only major confectionery company remaining open to acquisition by anybody. All the others are under private control or enjoy protection by virtue of the legislation in their own countries. Britain, which provides no such protection, risks losing the ownership of almost its entire chocolate confectionery industry and the No. 1 soft drinks company in the United Kingdom, which is the No. 3 company worldwide. No other Government would allow such a sacrifice without an investigation, without some reference being made, and without the predator being asked to give guarantees. The Government are behaving in a blatantly irresponsible and disgraceful manner.
The Government are in this instance operating a something-for-nothing policy. When it comes to defence matters, the Government say that we should never give up anything unless we can be sure of getting something in exchange. However, when it comes to industry takeovers, the Government are standing their own philosophy and policy on their heads.
The Minister claimed that the Labour party is making a political football out of this matter. I am against that happening, but if the Government refuse to offer any protection to the legitimate interests of British industry, the Labour party will not only be right but will have a bounden duty to make that a political issue in the next general election in 1990 or 1991. It will go to the country with the issues of poll tax, the National Health Service and social security, and will also say, "Vote Conservative and you will lose all your protection and your basic industries." When the Prime Minister visited Cadbury Schweppes in the course of the last election to see what was happening there and to win votes, she did not say then to


the work force, "If there is an offer for this company, I will allow it to go ahead without protecting your legitimate interests." If the Government do not come to their senses, it will be the duty of the Labour party to raise the issue nationwide at the next general election.

Mr. John Greenway: I confess to mixed feelings in approaching this debate. I am glad that the House is again being given an opportunity to consider the future of Rowntree. The House may recall that I initiated an Adjournment debate on this matter shortly before the House rose for the Whitsun recess. In the event, it did not begin until about 5.30 in the morning. I am pleased that on this occasion we are debating the matter at a more sociable hour, and I am sure that my hon. Friend the Under-Secretary of State for Corporate Affairs endorses that remark.
I have mixed feelings because of my deep distrust of the motives of the Labour party in bringing this issue before the House today. It is noticeable that, since my right hon. and noble Friend the Secretary of State for Trade and Industry announced that he did not intend to refer the Rowntree bid. to the Monopolies and Mergers Commission, what had been a matter of all-party consensus developed into a major party political argument. This debate is not about Rowntree and its future but gives an opportunity to the Opposition to attack the Government—[Interruption.] I have listened to this debate from the start and it has provided plenty of evidence to support that remark.
We have also seen Labour party heavyweights coming into the York area to make their views known.

Mr. Denis Howell: Who are they?

Mr. Greenway: I shall mention their names in a moment.
At first glance, the motion expresses many of the points which Government Members have made. But we all know, and the comments that we have heard today prove conclusively, that that is not what the Labour party really believes. Behind that is a much more sinister motive, and comments made in York over the past week confirm it.
First, the shadow Leader of the House, the hon. Member for Holborn and St. Pancras (Mr. Dobson), came to York to complain of institutions making use of northerners' savings. I was not sure from the comments reported in the paper what the hon. Gentleman meant, but the implication is clear: it suggests the direction of investment strategy that any future Labour Government would put in place. When the hon. Gentleman talks about northerners' savings and complains about institutions, he forgets that many institutional firms in Great Britain are managed from the north and from Scotland.
Then the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) came to York, and talked about proof of a public-interest requirement for mergers and a social ownership policy. That underlies what any future Labour Government would do, and there is no doubt that it would be damaging and unhelpful to our economy. I regret to say that the Labour party has attacked my right hon. Friend the Prime Minister for her attitude to the north. Such attacks are disgraceful and

entirely unjustified, given my right hon. Friend's concern and her commitment to inner-city action and, particularly in the north—not far from my constituency—the personal interest that she has taken in the Teesside development corporation.
The motion talks of adopting policies, but what policies would Labour advocate? It is significant that the motion fails to address the most important aspect, to which hon. Members have referred in the debate—the future of the draft European Community directive. Labour Members now say, thanks to some persuasion by the hon. Member for Dagenham (Mr. Gould), that they need to be European—but they do not think European. Their policies would have obstructed Rowntree in the European investment that it has already made. The hon. Member for Dagenham, I believe, referred to the factory in Hamburg purchased by Rowntree. There is no doubt that Rowntree, as a multinational company, is much fitter and better able to compete in the world because of its investments overseas.
I cannot escape the conclusion that the Rowntree issue will spur member states to ratify the European Commission directive with far more urgency than they might have if the issue had not come before us in the past six weeks. We debated reciprocity in my Adjournment debate. Before I forget, I must say to my right hon. and learned Friend that I do not feel that the answers that he has given today entirely address the problem. Leaving that aside, however, I believe that the European Commission directive is the real reason why the bid should have been referred. I cannot but feel that because of what has happened there will be a ratification, and a policy from which companies such as Rowntree may be able to benefit, in the not-too-distant future. In my view, the Government could have been a little more devious in helping to protect Rowntree's interests.
It is debatable whether at this late stage Rowntree's future as an independent company can be saved, and whether there may be a political solution. My hon. Friend the Member for York (Mr. Gregory) referred to the initiatives of our friend the Member of the European Parliament for York, Mr. Edward McMillan Scott, to persuade the French and German Governments to consider the implications of the Nestlé and Suchard bids for Rowntree. I feel, however, that it would be far better if in the time left tonight we looked at the future and tried to address some of the lessons that Parliament, we as politicians and the community at large may be able to learn from what has happened.
The main reason why I object so strongly to what Labour Members have said today is their attempt to apportion all the blame for Rowntree's position to the Government.

Mr. Geoffrey Lofthouse: It is true.

Mr. Greenway: If the hon. Gentleman will listen, he will realise that it is patently obvious that that is not the case. I believe that both the management of the company and the institutions must share some of the responsibility. Suchard first made approaches to Rowntree some four years ago, at the time of the publication of the Nestlé offer document. It was made clear at the press conference that Suchard had approached Rowntree a year ago, and the company did not appear to respond to those approaches.
A certain feeling is emerging among the work force in the constituency of York and in my constituency. While I have responsibility for a large rural part of north Yorkshire, part of the Rowntree factory complex is in my constituency, along with many hundreds, if not thousands, of the work force. I feel that the company could have been more ready to respond to the bids that have been made. I am slightly mystified about why the defence from Rowntree was not published as soon as possible after the publication of the Nestlé offer document, rather than Rowntree's waiting to see whether the bid was referred.
As for the institutions, I think that they could have had much more discussion with the management about how they saw the company's future. This is a slightly offensive point, but we have heard some implied criticism of the stand that we have taken, as though this were just a little local difficulty. That is not the case: it is an important national issue. It highlights the fear that some of our better businesses will fall to predators outside the European Community. As local politicians we certainly should not interfere, but recognising what has happened to Rowntree we should perhaps take more of an interest.
As I have said, I feel that the Government could have been more devious. They could have helped Rowntree by referring the bid and giving a spur to the debate which must come in the next two weeks, on 22 June, to ratify the European Commission directive. The people of York feel that the Government have let them down, and I must respect that view by abstaining in the vote tonight.

Mr. Geoffrey Lofthouse: I agree with many of the points that have been made by the hon. Member for York (Mr. Gregory). The Government should have given serious consideration to the possible spin-off of job losses as a result of this takeover bid. They have the power to do so, regardless of Sir Gordon Borrie's recommendations. It is obvious that the Government are not giving sufficient protection to British industry, especially when the companies concerned are based in the north. In my area, Rowntree is a well-respected company, where the work force is happy and proud to work. Six hundred and fifty employees are based in the Castleford area, where during the past four or five years the Government have deliberately run down the job opportunities. Recently in a meeting in this place, the chairman of Nestlé could give no guarantee whatsoever that there would be no job losses arising out of this takeover.

Mr. Vaz: My hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) has mentioned the possibility of job losses in the north. I hope that he will note that there is a Rowntree factory in Leicester. It is a Fox's Glacier Mint factory. When I visited the factory last week, there was widespread anxiety shown by the work force, especially as this is the third takeover that it has been subjected to in the past 10 years. Will he agree that nothing that the Chancellor of the Duchy of Lancaster has said will reassure those workers in Leicester about potential job losses?

Mr. Lofthouse: I agree with my hon. Friend the Member for Leicester, East (Mr. Vaz). We can expect job

losses if we take into account the track record of previous takeover bids. However, I sincerely hope that my interpretation is wrong.
I feel that the Government should have had the bid investigated. There is more to it than strict rigid guidelines for the Secretary of State and, indeed, Sir Gordon Borrie. If they are so rigidly bound to the guidelines, I suggest that the law needs changing. I would hope that any Government—where there is a threat to jobs at major British companies and takeover bids resulting in British companies being controlled by foreign companies—would always be keen to conduct a thorough investigation of the social and job loss consequences.
I am not surprised at the treatment that many parts of the north have received. I disagree with the hon. Member for Ryedale (Mr. Greenway) who said that the Government had not disregarded many areas of the north. If the hon. Gentleman lived in my area where the Rowntree factory is situated, he would have a different opinion.
I am sorry that the Chancellor of the Duchy of Lancaster has left, because I have some messages for him. In four years, 10,000 jobs have been lost arising out of direct Government action. His own Department has not done one stroke to encourage further industry in that area. I am now talking about the small area that includes the town of Castleford.
After persistent pressure, meetings with Ministers, speeches in the House and correspondence, we have still not convinced the Minister that there should be some assistance for the north. Many of my constituents who work at the Rowntree factory are the wives of the miners who have been thrown out of work, and will probably never work again. Do Conservative Members not think that there is anxiety in the area? Do Conservative Members not think that the bid should have been investigated thoroughly to ascertain what might be the social consequences? I think that any really responsible Government would have wanted that.
It appears to me that all that the Government want to do is continue their policy of sending our companies abroad at the expense of the British workers. When I visited the Rowntree factory the workers were 100 per cent. against this takeover bid. They do not want to be working for some faceless people in Europe. They trust and respect the people that they work for now. Have we no pride left? Should not the Government assist locally and nationally established companies with a major success record like Rowntree? I hope that any Government would do so. I believe that the Government have an obligation to refer this takeover bid even at this late stage. I hope that they will.

Mr. Graham Riddick: One of the matters that has most concerned me about his whole issue is the way in which many fears have been generated in towns like York and Halifax. Those are fears which I regard as unnecessary. There are fears that jobs will be lost and that factories will be run down. Those points of view, mainly of the Opposition, will, I fear, lead to the general opinion that it is bad to have foreign investment and that foreign takeovers are bad for Britain. That is a general premise that I challenge from my own experience.
Before I became a Member of the House, I was in industry. I worked for an American company; I worked for a British company; I worked for a British company that was taken over by an American company; and I worked for an American company that went into partnership with a British company. Having worked for companies which were owned by foreign companies, I would say that, generally speaking, they are a force for economic good. Their investment in this country has contributed significantly to prosperity and jobs.
I was hoping to have time to go through some of the machinations which went on during my time in those companies, but time is short. The last thing that I or my company would have wanted would have been to have the Government interfering and trying to alter the decisions that needed to be taken. Overseas investment and takeovers are part and parcel of an open world trading. We cannot pick and choose which ones we approve of and which we do not. With our now thriving exporting companies and exporting tradition, we are the last country that should be stifling free international trade. We should not be erecting barriers of any kind, be it in trade or investment. As we know, internal investment in the United Kingdom from overseas is good for Britain. It is part of the exchange of ideas and approaches. It brings expertise, investment, jobs and prosperity into the United Kingdom.
We should not forget that Britain, too, is playing its role. In the first four months of this year, British companies have made takeover bids for about 68 companies in Europe. However, the most certain way for public companies to protect themselves against unwelcome takeover bids is to ensure maximum efficiency, maximum competitiveness and continuous investment and planning.

Mr. Lofthouse: Is the hon. Gentleman saying that Rowntree has not done that?

Mr. Riddick: I am saying that the premium that the hon. Member for Dagenham (Mr. Gould) says can be squeezed out after takeover bids is not there. Therefore, it is up to British companies to ensure their competitiveness. If British companies do that, their share prices will reflect all those factors and their shareholders will be satisfied. It would make it far more difficult for outside companies to mount successful takeover bids. One need consider only companies such as ICI, Marks and Spencer and Trusthouse Forte, which have not been on the end of takeover bids.
The hon. Members for Dagenham and for Halifax (Mrs. Mahon) both referred to the employment implications of the takeover bid and suggested that the Swiss predator would threaten employment prospects at Rowntree. I do not know whether that is true, but I think that Opposition Members would be quite happy if a British company were making a bid for Rowntree. If, say, Hanson Trust, which has a reputation for squeezing every last ounce of efficiency out of every company, were making a bid for Rowntree, fears for jobs might be far greater.
I regret that I have not had the time to develop those points as I would have wished. We, in this country and in this Government, cannot afford to risk the inward and outward investment which has served this country

extremely well over the past eight years and which has brought increasing prosperity and jobs to this country. That is why I shall vote against the motion.

Mr. John Garrett: In my constituency there is a Rowntree factory which employs about 1,100 workers. It is a long-established employer in a city that has lost much of its manufacturing industry during the past decade. The business was founded in 1883 by Albert Caley. It was taken over by Mackintosh in 1932, and Mackintosh merged with Rowntree in 1969.
We have no illusions in Norwich about Rowntree, but we have even fewer illusions about outside predators which appear to be proof against takeovers. When the Norwich factory was taken over by Rowntree, it employed 2,000 workers. We have had major redundancies in 1981, 1984, 1986 and 1988 and there has been much concern about its rundown. Two important lines were closed this year, although we understand that new products are to be brought forward in the factory. The company has issued a statement committing itself to its existing manufacturing plant. It is a modern, efficient and profitable plant and its return on assets is as good as that of any other plant in the group.

Mr. Tom Clarke: In relation to my hon. Friend's point about manufacturing, does he accept that in Scotland in the three major locations of the industry, in Glasgow, Girvan and Coatbridge, the work force and the management are arguing that the company's policy on investment, training and development has meant that less capital has been available and, because the shares are therefore not valued as highly as they might otherwise have been, they are being penalised for that investment?

Mr. Garrett: I hope to come to that point in the remaining few minutes available to me. However, I thank my hon. Friend for his useful intervention.
Our motion simply condemns the Government for their failure to refer the bid to the Monopolies and Mergers Commission and calls for a policy on monopolies and mergers. From the attack on chauvinism and xenophobia from the Chancellor of the Duchy of Lancaster, one would never have known that that was all that we were asking. Our point about referral relates not so much to this case as to the principles involved. Referral would have committed an informed analysis and a public debate about the national interest in such bids because several questions of national interest are raised by it.
Lord Young seemed to show remarkable naivety when he said that a foreign bidder would not acquire Rowntree simply to close substantial parts of it. Rowntree was valued at about £4 per share before the bid-the latest offer is £9·50. What accounts for the difference? It is the valuation that the Swiss place on the decades of investment by that company and on brand names, but brand names hardly show up in the balance sheet. Therefore, Rowntree's vulnerability has nothing to do with economic performance, but relates to the kind of business that it is and the short-termism of the City which persistently undervalues that kind of investment.
Brand names are portable. Years ago I worked as a consultant for the Rowntree group when it was producing a famous brand of foreign chocolate. A successful bidder could produce products with the same labels anywhere.
Employment is not necessarily tied to the product. Without an undertaking to maintain employment in Rowntree plants in Britain, a successful bidder could well transfer production and act significantly against the national interest. Why do not the Government seek an undertaking from the bidders about their plans for future employment? A company which is paying £10 or more per share for a company with assets of under £4 per share is likely to want to cut costs and to realise assets.
A reference to the Monopolies and Mergers Commission would also enable some thought to be given to the single market in 1992. We have heard a lot about reciprocity so far as the Swiss are concerned, but, of course, it applies also to the West Germans. While the shares of British companies are freely traded and are largely held by institutions which have no conception of the national interest, British firms will be sitting ducks for takeovers. We can see from the development of monopolies and mergers policy in the EEC that the likelihood is that EEC law will embody an EEC preference if it is not to give an open door to predators from outside the EEC or require some kind of reciprocity on the part of companies that are outside the EEC. There is no evidence that the Government have considered that problem.
Conservative Members have made great defences of Nestlé and of its investment in Britain. Nestlé has bought several brands in Britain, but in the past six years its share of the market has halved in the cases of Findus and Ashbourne and more than halved in the cases of Crosse and Blackwell and Libby. The company has substantially cut its employment in Britain. If we apply that record to Rowntree's success the outlook is not very encouraging. Nestlé has been widely criticised worldwide for selling its milk products in the Third world. It is constantly a target for boycotts. It would be ironic if Rowntree, with its history of social conscience, were at the receiving end of boycotts as a result of being tied to Nestlé's policy of selling milk in Africa.
Rowntree is a victim of short-termism and of no thought being paid to the national interest. The Government have no concern for the matter. The people of Norwich will know who to blame if there are job losses. They will blame Lord Young and his finger puppet, the Chancellor of the Duchy of Lancaster.

Sir Giles Shaw: I shall take up only a few seconds of the House's time but I should like to put three brief points to my right hon. and hon. Friends on the Front Bench.
First, when my right hon. and learned Friend the Chancellor of the Duchy of Lancaster opened the debate for the Government, he once again made it clear that he was not prepared to consider issues such as the European dimension as suitable to be referred to the MMC in the context of the Rowntree-Nestlé case. It is ludcrous for his Department to send out various signals, including those in the Secretary of State's interview on "The Money Programme" on BBC2 and in The Observer on 8 May, when he referred to the possibility of changes, including the possibility of larger conglomerations in the United Kingdom market, if at the same time he is not prepared even to consider that such issues deserve three weeks' or

even three months' examination by the Monopolies and Mergers Commission. That is absurd. We must have a clear signal about what the future will hold.
Secondly, this issue is not about competition. It is about the acquisition by two Swiss companies of a major confectionery company holding a major slice of the European market. Rowntree plus Nestlé would have a 27 per cent. share of the French market. Is that or is that not a competitive matter? It should be, in relation to the EC. Those issues must be addressed.
Thirdly and finally, the interest, anxiety and commitment shown by all the people who are associated with the Rowntree company suggest that that company, which for between 50 and 100 years has established millions of satisfied consumers with its brands and which has rates of sale running at millions per week, is a company to be proud of, and that we should seek to assist it.

Mr. Tony Blair: This has been a short but important debate. Two weeks ago, the Government had a choice. They could refer Nestlé's bid for Rowntree to the Monopolies and Mergers Commission for objective scrutiny as to whether the bid was in the public interest, or they could leave the issue of Rowntree's independence solely to the subjective assessment of its day-to-day shareholders. The Government chose the latter. We believe that decision to have been wrong for Rowntree but, moreover, we believe that it will have the most profound and adverse consequences for all United Kingdom industry. In advance of 1992 and the single European market, it will signal that Britain, uniquely among EC countries, is prepared to put its industrial future in the hands of market forces. As the slogan says, history may be in the making, but it will be made by the whim of the market rather than the will of the people.
There are several obvious reasons for a reference and much has been said in favour of them today. There is, of course, the interest of the work force. I find extraordinary the degree to which the Government are prepared to put faith in the institutional shareholders to come to a rational decision about the company's future, but they seem to count for nothing the views of the work force. Those workers have been employed by the company for years and have created the profit upon which the institutional shareholders depend.

Mr. Martlew: I am grateful to my hon. Friend far giving way and I am sorry that I was not called to speak because I was a manager for Nestlé and worked for that company for 21 years.
My hon. Friends the Members for Pontefract and Castleford (Mr. Lofthouse) and for Newcastle upon Tyne, North (Mr. Henderson) mentioned a meeting we had with the managing director of Nestlé, Mr. Maucher, in the House on 9 May. My hon. Friends are right to say that no assurance was given at that meeting about employment I am sure that my hon. Friends will recall, however, that I asked the managing director whether the company would keep the headquarters in York. Mr. Maucher said that the company would not be subservient to Croydon, but would be answerable to Switzerland. That decision will not only save the jobs at the York headquarters, but will save the jobs of the sales force and those in distribution, about which my hon. Friends expressed concern.
I accept that assurance on the basis of my experience of takeovers carried out by Nestlé. If Nestlé had decided to amalgamate the companies and move the headquarters to Croydon, all the jobs would have been lost. If I was the mayor of York I would have the Hansard record of this assurance blown up and put in the council chamber to remind Nestlé of the assurance that their managing director gave hon. Members in this House.

Mr. Blair: That is one reason why it is absolutely right to refer the bid to the MMC, so that that undertaking can be properly tested.
The second obvious reason for reference is the importance of the industry to the region. The third obvious reason is that we cannot look at Rowntree without considering the fate of Cadbury. The two are linked because, the day after Nestlé launched its bid for Rowntree, General Cinema said that it would no longer remain a passive investor in Cadbury, and that it had set aside $1 billion for acquisitions. There is an obvious risk that that company will make a bid for Cadbury and, if successful, will sell off the confectionery part of Cadbury to whoever loses the bid for Rowntree.
In this debate we are talking about not just the 12,000 jobs at Rowntree or about the importance of Rowntree to the region, but the importance of an entire manufacturing sector to the United Kingdom. Those reasons alone would have justified reference to the MMC.
We have heard a great deal about reciprocity, but it is worth reminding hon. Members that the word came from the mergers document published by the Government in March. The Government have put reciprocity on the agenda. The reason why the Government believe that reciprocity should be a factor—they are right to think it—is not due to some tit-for-tat retaliation against firms that do not offer reciprocal facilities, but because lack of reciprocity is an element in unfair competition.
Ministers may say that there is no formal legislative bar on British companies taking over Swiss companies, but by the operation of the commercial code in Switzerland and as a result of the recommendations of its largest self-regulating financial body, the Bankers Association, no hostile bid by our companies or any other company could be mounted in Switzerland. I will give way to the Minister if he can tell me when such a hostile bid has been made. The truth is that no hostile bids are possible. If that is the case, it is clearly a further factor that should be considered.
When I first considered this matter, I thought that Switzerland was perhaps in a unique position vis-a-vis other EEC countries and that it had unique barriers against hostile takeover bids. It is Britain, however, that is in the unique position, because it has an open season for foreign hostile bids. In case anyone believes that that is not important, it is clear as we approach 1992 and the single European market that cross-border merger activity will increase. In 1987 there were more than 1,000 such acquisitions and that, excluding United States companies, represented an increase of almost 40 per cent.
The Minister said that the United Kingdom has made acquisitions in Europe, and in 1987 the United Kingdom made 134 such acquisitions. The total value of those acquisitions, however, comes to less than half the value of the Nestlé and Suchard bid for Rowntree. That puts such acquisitions in context. More importantly, in the research

that I have made I have been unable to discover a single hostile bid from the United Kingdom—I shall gladly give way to the Minister if that is not the case. They were all agreed bids.
The Minister has said that 1992 is relevant, but I believe that difficulties lie ahead. We know that cross-border activity is on the increase. We also know that Britain has a unique open system that is not available in the rest of Europe whether that is West Germany, France, Belgium, the Netherlands or even outside the EC in Japan. All those countries have effective financial and corporate structures that prevent hostile takeover bids. When corporate activity increases, foreign predators will look for an outlet in the EC. They shall decide what companies they seek to acquire. The danger is that, if they are prevented from taking over companies elsewhere in the EC, they will come to Britain. The danger for Britain is that it will become uniquely open for predators.
It simply will not do to say that reciprocity is simply about Switzerland or about some type of nationalist protection. I do not believe that Ministers have understood the case that has been made by British industry. British industry is not asking for special favours, it is not asking for unfair protection or for the playing field to be sloped in its direction. It is asking for a level playing field. It is asking for our Government to do no more in relation to our industry than other EC Governments do in relation to theirs. If the Government fail to act, Britain will have a uniquely open system. When Britain's doors are open for business, the doors of other EC countries will be closed, and therefore the queue will come to our door.
Perhaps the Government think that that threat can be taken lightly. In the past few weeks I have scoured the financial pages to discover the types of company that the financial press now believe will be put into play as a result of the Rowntree decision. It is not the Labour party that has said this, but the financial press, and it has been confirmed by the article by Sir Hector Laing to which reference has already been made. We already know about Cadbury, but the other companies at risk are United Biscuits, Tate and Lyle, Rank Hovis McDougall, Allied Lyons, Dalgety, Unigate, Northern Foods, Boots, Reckitt and Colman, Fisons, and Beecham Group. [AN HON. MEMBER: "So what?"] I will tell the hon. Gentleman so what. If the entire structure for decision-making within United Kingdom industry passes outside United Kingdom control in the aftermath of 1992 there will be no guarantee that we shall control our industrial future. Conservative Members may say that that is an unreal fear, but the country must decide whom to believe. Do they believe the representatives of industry and the CBI? Do they believe the Sir Hector Laings of this world who support the Conservative party, or do they believe Conservative Members? The truth is that the Government have decided simply to leave these matters to market forces. Who are these great rational decision-makers in the market? Who are these people in whom the Government put such touching faith as coming to decisions in the interests of British industry?
My hon. Friend the Member for Dagenham described exactly what will happen to the share price of Rowntree during the last few weeks. Is it seriously being suggested that all institutional shareholders are considering what is in the long-term interests of Rowntree employees, the company and the region? Are they sitting wondering how United Kingdom manufacturing industry will fare under


this new regime? They are interested only in the share price, and that is not a temptation but a duty. When the Government say that this is all about a view of the long-term performance of the industry, they are talking nonsense. Shareholders are merely seeing what the day-to-day share price is; when it doubles in more than two months, naturally they will feel obliged to sell. We are saying that we cannot allow decisions of this importance simply to be left in the hands of those institutional shareholders.
In their merger policy published in March, the Government said that there were public interest matters that had to be taken into account; some of the issues mentioned were employment, regional economic development, research and development, and even foreign takeovers. They went on to say:
The Government's view is that none of the matters mentioned … is one where the public interest typically diverges from the interests of private sector decision-makers.
That is the theology that says that the private market and the public good naturally coincide, but the Rowntree issue has proved that that view is wholly out of date. This Government have turned their hack on industry and it must now look to Labour.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Francis Maude): These debates that we have from time to time about specific mergers and merger policy allow us to discuss important fundamental issues, and the hon. Member for Sedgefield (Mr. Blair) has touched on some of them. But they all boil down to the fact that the Opposition have a deep hatred and fear of the free enterprise system. Mergers, essentially contested mergers, are the most obvious manifestation of the free enterprise system which they hate and fear. That is why they use these debates to mount an attack on the system. If there is one thing that they hate and fear more than United Kingdom free enterprise it is foreign free enterprise, and a great deal of this debate has been about good old-fashioned chauvinism wrapped up in a disreputable fig leaf. Many of their arguments have been disreputable and have done them no credit.
Any hostile or resisted bid for a well-known local company arouses anxieties in the region, and it is bound to. It is unsettling and no one knows what the future will hold, so it is natural that those involved should make representations to their local Members of Parliament. I know well the genuine anxieties of some of my right hon. and hon. Friends about this. They, properly, consider it their duty to make representations on behalf of those local interests. When something causes anxiety in this way politicians seek to take action and the only action available to them or the Government is to seek a reference to the MMC. That is what my hon. Friends have properly done. The Government took the view that in this case a reference was an inappropriate use of that instrument of Government policy for reasons which I shall come to.
I resent assertions from Labour Members that our merger policy is in some way unclear. We state clearly in the document from which the hon. Gentleman quoted that competition is the principal consideration, and nothing could be clearer than that. What emerges from the debate is that the Opposition want our policy to be less clear, and want many other considerations also to be taken into account. They want us, in unknown and unstated mergers,

to give way to employment and regional considerations, and nothing could be less clear than that. That would be to muddy the waters and make it less easy for those who seek to know exactly what our policy is.
The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) and others said that employment should he a consideration, and that no guarantee of job security has been given by the bidders. No guarantee of job security exists under the present management, nor could it possibly do so. There is not a single company in the country under public sector, private sector, United Kingdom or foreign ownership which can give an absolute guarantee of job security. The complaint that a bid is made without any absolute guarantee of job security is absurd and the hon. Gentleman must know that. There is absolutely no reason to suppose that jobs are any more at risk under Nestlé and Suchard than under the present management. Suchard has said in terms that if it were successful—I have no idea whether it will be—it will move its headquarters of the whole confectionery business to York.
Our policy is clear, consistent, fair and as apt to deal with the considerations of the single market in Europe as with purely United Kingdom mergers. The underlying complaint seems to be that the policy is not slanted to protect United Kingdom companies from foreign takeover. We believe that open markets and the freedom of money and investment to move across frontiers has been beneficial to the United Kingdom, and that flow has been predominantly by United Kingdom companies making investments overseas. There is now twice as much United Kingdom investment overseas as foreign investment in the United Kingdom. The policy of open markets has benefited us and we propose to continue with it.
Labour Members seem to think that it is bad news when foreign companies invest in the United Kingdom and equally when British companies invest overseas. They want an old-fashioned siege economy. They do not understand that times have moved on. We now live in an age of the international economy. No single economy can exist on its own. There will be cross-investment. The whole concept of a national company does not exist.

Mr. Blair: rose—

Mr. Maude: I shall not give way because we are short of time and I have a few further points to make.
My hon. Friend the Member for Surrey, North-West (Mr. Grylls) asked about a draft EC mergers regulation. It is thought that some sort of mergers regime will automatically solve all the problems, but there are different and conflicting concerns, and a single draft mergers regulation cannot resolve them all. I assure him that on 22 June when this is discussed at the Council of Ministers we shall approach this positively and consider carefully how to take it forward. But we do not now know how the draft regulation will end up. Many matters remain unclear—not just drafting problems, but fundamentals. There remain several alternative formulations within the draft and the wording is by no means clear. Several of the fundamentals are left unsettled. Certainly we are not saying that we are against this but we want to make sure that the form in which it emerges is suitable.
Shareholders are best placed to make the decisions. There have been some unsavoury remarks during the debate about the institutional shareholders who have to make some of the decisions. Institutional shareholders are


not for the most part holding the shares on their own account. They are running pension funds, and they have a moral and legal obligation to pay pensions and to ensure that investors get a proper return on their money. So they have to ensure that they make the right decisions on behalf of the individuals who have entrusted their money to them. The upshot of the Opposition's remarks is that individuals who have invested money in pension funds would be short-changed by Government intervention, causing the return on their investment to be reduced. It is as simple as that. A pension fund, which has to provide pensions in future, has, above all institutional investors, an obligation to look to the long term. Institutional investors do not deal simply with short-term interest.
The time has gone when it is appropriate for companies resisting bids to look to the Government as their first line of defence. It is for them to persuade shareholders that their management offers the best hope. So I have no hesitation in commending to my right hon. and hon. Friends the Government's amendment and in urging them to reject the Opposition motion.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 203, Noes 301.

Division No. 343]
[7.01 pm


AYES


Abbott, Ms Diane
Cunliffe, Lawrence


Adams, Allen (Paisley N)
Cunningham, Dr John


Allen, Graham
Dalyell, Tam


Alton, David
Darling, Alistair


Anderson, Donald
Davies, Rt Hon Denzil (Llanelli)


Archer, Rt Hon Peter
Davies, Ron (Caerphilly)


Armstrong, Hilary
Davis, Terry (B'ham Hodge H'l)


Ashton, Joe
Dewar, Donald


Banks, Tony (Newham NW)
Dixon, Don


Barnes, Harry (Derbyshire NE)
Dobson, Frank


Barron, Kevin
Doran, Frank


Battle, John
Douglas, Dick


Beckett, Margaret
Duffy, A. E. P.


Benn, Rt Hon Tony
Dunnachie, Jimmy


Bennett, Nicholas (Pembroke)
Evans, John (St Helens N)


Bermingham, Gerald
Ewing, Mrs Margaret (Moray)


Bidwell, Sydney
Fatchett, Derek


Blair, Tony
Fearn, Ronald


Blunkett, David
Field, Frank (Birkenhead)


Boateng, Paul
Fields, Terry (L'pool B G'n)


Boyes, Roland
Fisher, Mark


Bradley, Keith
Flynn, Paul


Bray, Dr Jeremy
Foot, Rt Hon Michael


Brown, Nicholas (Newcastle E)
Foster, Derek


Bruce, Malcolm (Gordon)
Foulkes, George


Buchan, Norman
Fraser, John


Buckley, George J.
Fyfe, Maria


Caborn, Richard
Galbraith, Sam


Campbell, Menzies (Fife NE)
Galloway, George


Campbell, Ron (Blyth Valley)
Garrett, John (Norwich South)


Campbell-Savours, D. N.
George, Bruce


Canavan, Dennis
Godman, Dr Norman A.


Clark, Dr David (S Shields)
Golding, Mrs Llin


Clarke, Tom (Monklands W)
Gordon, Mildred


Clay, Bob
Gould, Bryan


Clelland, David
Graham, Thomas


Clwyd, Mrs Ann
Griffiths, Nigel (Edinburgh S)


Cohen, Harry
Grocott, Bruce


Cook, Frank (Stockton N)
Harman, Ms Harriet


Cook, Robin (Livingston)
Hattersley, Rt Hon Roy


Corbett, Robin
Heffer, Eric S.


Cousins, Jim
Henderson, Doug


Crowther, Stan
Hinchliffe, David


Cryer, Bob
Hogg, N. (C'nauld &amp; Kilsyth)


Cummings, John
Holland, Stuart





Home Robertson, John
O'Neill, Martin


Howell, Rt Hon D. (S'heath)
Orme, Rt Hon Stanley


Howells, Geraint
Patchett, Terry


Hoyle, Doug
Pendry, Tom


Hughes, John (Coventry NE)
Pike, Peter L.


Hughes, Robert (Aberdeen N)
Powell, Ray (Ogmore)


Hughes, Roy (Newport E)
Prescott, John


Hughes, Sean (Knowsley S)
Primarolo, Dawn


Illsley, Eric
Quin, Ms Joyce


Ingram, Adam
Radice, Giles


Janner, Greville
Randall, Stuart


John, Brynmor
Rees, Rt Hon Merlyn


Jones, Barry (Alyn &amp; Deeside)
Reid, Dr John


Jones, leuan (Ynys Môn)
Richardson, Jo


Jones, Martyn (Clwyd S W)
Roberts, Allan (Bootle)


Kaufman, Rt Hon Gerald
Robertson, George


Kennedy, Charles
Robinson, Geoffrey


Kirkwood, Archy
Rogers, Allan


Leadbitter, Ted
Ross, Ernie (Dundee W)


Leighton, Ron
Rowlands, Ted


Lestor, Joan (Eccles)
Ruddock, Joan


Lewis, Terry
Salmond, Alex


Lloyd, Tony (Stretford)
Sedgemore, Brian


Lofthouse, Geoffrey
Sheerman, Barry


Loyden, Eddie
Shore, Rt Hon Peter


McAllion, John
Short, Clare


McAvoy, Thomas
Skinner, Dennis


McCartney, Ian
Smith, Andrew (Oxford E)


Macdonald, Calum A.
Smith, C. (Isl'ton &amp; F'bury)


McFall, John
Smith, Rt Hon J. (Monk'ds E)


McGrady, Eddie
Snape, Peter


McKay, Allen (Barnsley West)
Soley, Clive


McKelvey, William
Spearing, Nigel


Maclennan, Robert
Steel, Rt Hon David


McTaggart, Bob
Strang, Gavin


Madden, Max
Straw, Jack


Mahon, Mrs Alice
Taylor, Mrs Ann (Dewsbury)


Marek, Dr John
Taylor, Matthew (Truro)


Marshall, David (Shettleston)
Thomas, Dr Dafydd Elis


Marshall, Jim (Leicester S)
Turner, Dennis


Martin, Michael J. (Springburn)
Vaz, Keith


Martlew, Eric
Wall, Pat


Maxton, John
Wallace, James


Meale, Alan
Walley, Joan


Michael, Alun
Wareing, Robert N.


Michie, Bill (Sheffield Heeley)
Welsh, Andrew (Angus E)


Michie, Mrs Ray (Arg'l &amp; Bute)
Welsh, Michael (Doncaster N)


Millan, Rt Hon Bruce
Wigley, Dafydd


Mitchell, Austin (G't Grimsby)
Williams, Rt Hon Alan


Moonie, Dr Lewis
Williams, Alan W. (Carm'then)


Morgan, Rhodri
Wilson, Brian


Morley, Elliott
Winnick, David


Morris, Rt Hon A. (W'shawe)
Wise, Mrs Audrey


Morris, Rt Hon J. (Aberavon)
Worthington, Tony


Mowlam, Marjorie



Mullin, Chris
Tellers for the Ayes:


Nellist, Dave
Mr. Frank Haynes and Mr. Ken Eastham.


Oakes, Rt Hon Gordon



O'Brien, William





NOES


Adley, Robert
Body, Sir Richard


Amery, Rt Hon Julian
Bonsor, Sir Nicholas


Amess, David
Boswell, Tim


Amos, Alan
Bottomley, Peter


Arbuthnot, James
Bottomley, Mrs Virginia


Arnold, Jacques (Gravesham)
Bowden, Gerald (Dulwich)


Arnold, Tom (Hazel Grove)
Bowis, John


Ashby, David
Boyson, Rt Hon Dr Sir Rhodes


Aspinwall, Jack
Braine, Rt Hon Sir Bernard


Atkins, Robert
Brandon-Bravo, Martin


Baker, Rt Hon K. (Mole Valley)
Brazier, Julian


Baker, Nicholas (Dorset N)
Bright, Graham


Baldry, Tony
Brooke, Rt Hon Peter


Batiste, Spencer
Brown, Michael (Brigg &amp; Cl't's)


Bellingham, Henry
Browne, John (Winchester)


Bendall, Vivian
Bruce, Ian (Dorset South)


Biggs-Davison, Sir John
Buchanan-Smith, Rt Hon Alick


Blackburn, Dr John G.
Buck, Sir Antony


Blaker, Rt Hon Sir Peter
Budgen, Nicholas






Burns, Simon
Heathcoat-Amory, David


Burt, Alistair
Heddle, John


Butcher, John
Hicks, Robert (Cornwall SE)


Butler, Chris
Hind, Kenneth


Butterfill, John
Hogg, Hon Douglas (Gr'th'm)


Carlisle, John, (Luton N)
Holt, Richard


Carlisle, Kenneth (Lincoln)
Hordern, Sir Peter


Carrington, Matthew
Howard, Michael


Cartwright, John
Howarth, Alan (Strat'd-on-A)


Cash, William
Howarth, G. (Cannock &amp; B'wd)


Chalker, Rt Hon Mrs Lynda
Howell, Rt Hon David (G'dford)


Channon, Rt Hon Paul
Howell, Ralph (North Norfolk)


Chapman, Sydney
Hughes, Robert G. (Harrow W)


Chope, Christopher
Hunt, David (Wirral W)


Churchill, Mr
Hunter, Andrew


Clark, Dr Michael (Rochford)
Hurd, Rt Hon Douglas


Clarke, Rt Hon K. (Rushclitfe)
Irvine, Michael


Colvin, Michael
Irving, Charles


Conway, Derek
Jack, Michael


Coombs, Anthony (Wyre F'rest)
Jackson, Robert


Couchman, James
Janman, Tim


Cran, James
Johnson Smith, Sir Geoffrey


Critchley, Julian
Jones, Robert B (Herts W)


Currie, Mrs Edwina
Jopling, Rt Hon Michael


Curry, David
Kellett-Bowman, Dame Elaine


Davies, Q. (Stamf'd &amp; Spald'g)
Key, Robert


Davis, David (Boothferry)
King, Roger (B'ham N'thfield)


Day, Stephen
King, Rt Hon Tom (Bridgwater)


Devlin, Tim
Kirkhope, Timothy


Dickens, Geoffrey
Knapman, Roger


Dicks, Terry
Knight, Greg (Derby North)


Dorrell, Stephen
Knight, Dame Jill (Edgbaston)


Douglas-Hamilton, Lord James
Knowles, Michael


Dover, Den
Knox, David


Dunn, Bob
Lamont, Rt Hon Norman


Durant, Tony
Lang, Ian


Dykes, Hugh
Latham, Michael


Eggar, Tim
Lawrence, Ivan


Emery, Sir Peter
Lawson, Rt Hon Nigel


Evans, David (Welwyn Hatf'd)
Leigh, Edward (Gainsbor'gh)


Fallon, Michael
Lennox-Boyd, Hon Mark


Farr, Sir John
Lester, Jim (Broxtowe)


Favell, Tony
Lightbown, David


Fookes, Miss Janet
Lilley, Peter


Forman, Nigel
Lloyd, Sir Ian (Havant)


Forsyth, Michael (Stirling)
Lloyd, Peter (Fareham)


Forth, Eric
Lord, Michael


Fowler, Rt Hon Norman
McCrindle, Robert


Franks, Cecil
McCusker, Harold


Freeman, Roger
Macfarlane, Sir Neil


French, Douglas
MacKay, Andrew (E Berkshire)


Fry, Peter
Maclean, David


Gale, Roger
McLoughlin, Patrick


Gardiner, George
McNair-Wilson, M. (Newbury)


Gill, Christopher
McNair-Wilson, P. (New Forest)


Gilmour, Rt Hon Sir Ian
Madel, David


Goodhart, Sir Philip
Major, Rt Hon John


Goodlad, Alastair
Malins, Humfrey


Goodson-Wickes, Dr Charles
Mans, Keith


Gorman, Mrs Teresa
Maples, John


Gorst, John
Marlow, Tony


Gow, Ian
Marshall, John (Hendon S)


Grant, Sir Anthony (CambsSW)
Marshall, Michael (Arundel)


Griffiths, Sir Eldon (Bury St E)
Martin, David (Portsmouth S)


Griffiths, Peter (Portsmouth N)
Maude, Hon Francis


Grist, Ian
Maxwell-Hyslop, Robin


Ground, Patrick
Mayhew, Rt Hon Sir Patrick


Grylls, Michael
Mellor, David


Gummer, Rt Hon John Selwyn
Miller, Hal


Hamilton, Hon Archie (Epsom)
Mills, Iain


Hamilton, Neil (Tatton)
Miscampbell, Norman


Hanley, Jeremy
Mitchell, Andrew (Gedling)


Hannam, John
Moate, Roger


Hargreaves, A. (B'ham H'll Gr')
Monro, Sir Hector


Hargreaves, Ken (Hyndburn)
Montgomery, Sir Fergus


Harris, David
Moore, Rt Hon John


Haselhurst, Alan
Morrison, Hon Sir Charles


Hawkins, Christopher
Moss, Malcolm


Hayes, Jerry
Mudd, David


Hayward, Robert
Neale, Gerrard





Needham, Richard
Stewart, Andy (Sherwood)


Nelson, Anthony
Stewart, Ian (Hertfordshire N)


Neubert, Michael
Stokes, John


Newton, Rt Hon Tony
Stradling Thomas, Sir John


Nicholls, Patrick
Sumberg, David


Nicholson, David (Taunton)
Summerson, Hugo


Nicholson, Emma (Devon West)
Tapsell, Sir Peter


Onslow, Rt Hon Cranley
Taylor, Ian (Esher)


Oppenheim, Phillip
Taylor, John M (Solihull)


Owen, Rt Hon Dr David
Taylor, Teddy (S'end E)


Page, Richard
Tebbit, Rt Hon Norman


Paice, James
Temple-Morris, Peter


Patnick, Irvine
Thatcher, Rt Hon Margaret


Patten, John (Oxford W)
Thompson, D. (Calder Valley)


Pattie, Rt Hon Sir Geoffrey
Thompson, Patrick (Norwich N)


Pawsey, James
Thome, Neil


Porter, Barry (Wirral S)
Thornton, Malcolm


Porter, David (Waveney)
Townend, John (Bridlington)


Portillo, Michael
Townsend, Cyril D. (B'heath)


Powell, William (Corby)
Tracey, Richard


Price, Sir David
Tredinnick, David


Redwood, John
Trippier, David


Renton, Tim
Trotter, Neville


Rhodes James, Robert
Twinn, Dr Ian


Riddick, Graham
Vaughan, Sir Gerard


Ridley, Rt Hon Nicholas
Viggers, Peter


Ridsdale, Sir Julian
Waddington, Rt Hon David


Rifkind, Rt Hon Malcolm
Wakeham, Rt Hon John


Roberts, Wyn (Conwy)
Waldegrave, Hon William


Rost, Peter
Walden, George


Rowe, Andrew
Walker, Bill (T'side North)


Rumbold, Mrs Angela
Walker, Rt Hon P. (W'cester)


Ryder, Richard
Waller, Gary


Sackville, Hon Tom
Walters, Dennis


Sainsbury, Hon Tim
Ward, John


Scott, Nicholas
Wardle, Charles (Bexhill)


Shaw, David (Dover)
Watts, John


Shephard, Mrs G. (Norfolk SW)
Wells, Bowen


Shepherd, Colin (Hereford)
Wheeler, John


Shepherd, Richard (Aldridge)
Widdecombe, Ann


Shersby, Michael
Wiggin, Jerry


Sims, Roger
Wilshire, David


Skeet, Sir Trevor
Winterton, Mrs Ann


Smith, Tim (Beaconsfield)
Wolfson, Mark


Soames, Hon Nicholas
Wood, Timothy


Speller, Tony
Woodcock, Mike


Spicer, Sir Jim (Dorset W)
Yeo, Tim


Spicer, Michael (S Worcs)
Young, Sir George (Acton)


Squire, Robin
Younger, Rt Hon George


Stanbrook, Ivor



Stanley, Rt Hon John
Tellers for the Noes:


Steen, Anthony
Mr. Robert Boscawen and Mr. Tristan Garel-Jones.


Stern, Michael



Stevens, Lewis

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House recognises the benefits which inward and outward investment have brought to the British economy; endorses the Government's merger policy as set out in the Department of Trade and Industry's paper on the policy and procedures of merger control published on 3rd March 1988; and supports the decision not to refer to the Monopolies and Mergers Commission Nestle's bid for Rowntree or Suchard's 29·9 per cent. holding in Rowntree, as being consistent with that policy.

Mr. Nigel Griffiths: On a point of order, Mr Speaker. You may be aware that today the South African authorities attacked the British Broadcasting Corporation and its coverage of events in


South Africa. They have done so in writing. Is it not in order for the Home Secretary to repudiate this unwarranted interference in the affairs of the BBC and to come to the House and explain his and the Government's response?

Mr. Speaker: That is not a point of order. I am sure that what the hon. Gentleman has said has been heard by Ministers on the Front Bench.

Mr. Paul Boateng: Further to that point of order, Mr. Speaker—

Mr. Speaker: It was not a point of order. This matter could properly be raised tomorrow.

Rover Group

Mr. Speaker: We now come to the debate on the British Aerospace bid for the Rover Group. I must tell the House that I have selected the amendment in the name of the Prime Minister.

Mr. Bryan Gould: I beg to move,
That this House believes that the recent improvement in Rover Group's performance owes much to the efforts of the workforce and demonstrates what can be achieved by long term investment and public ownership; sees no real industrial logic in the proposed takeover of Rover by British Aerospace; deplores the give-away terms on which Rover is to be disposed of; demands assurances that the investment will be made in a new model range in order to provide the essential guarantee for Rover to remain a volume car manufacturer; and calls upon the Government to manifest its belief in the need to maintain British volume car manufacture by retaining Rover in public ownership and ensuring that the necessary investment is made.
We debated the proposed takeover by British Aerospace of Rover just five weeks ago, but I make no apology for returning to the subject because today we at least have a chance to vote on our motion. Five weeks have elapsed and we now have the opportunity to ask the Chancellor of the Duchy of Lancaster and his ministerial colleagues about the developments during that time. We also have a renewed chance to express our grave concern about the future of British volume car manufacturing.
In recent months we have debated and considered a whole range of different industrial questions. We have debated British Steel and British Shipbuilders and we looked at the Girobank only yesterday. Earlier today we considered Rowntree. In each of those cases the circumstances have been different. The issues have also been a little different but in each case the Government's attitude has been the same. They have made it perfectly clear that they will accept no responsibility whatever for the future fortunes of British industry.
I am reminded of the debate that we had towards, I think, the end of 1986 when the Chancellor of the Exchequer, confronted with the fact that British manufacturing industry had seen a deterioration in its trading performance since 1979 of £13 billion—the figure is now £17 billion—said that that was neither here nor there. That epitomises the Government's attitude to our manufacturing industry.
In this instance we see the Government's determination to wash their hands, on ideological grounds, of any part of British industry that happens to be in public ownership. Their prime concern, indeed their only concern, is to sell where possible at whatever price they can get. If they cannot get any price at all they will give whatever it may be away for nothing. That is true of the Govan shipyards and of the Rover Group.
When asked about jobs, about what happens to our strategic capacity in some of these important industries and about national interests, the Government are all too keen to say that from the moment privatisation is contemplated they cease to have any responsibility. They say that only the market prevails and that only the market must decide. Nowhere is this attitude more clearly demonstrated than in the British Aerospace bid for Rover, and nowhere is it more acutely important than in this case.
As I said on 4 May, we are talking about the future, indeed the survival, of the one remaining indigenously owned and controlled volume car manufacturer in Britain.
If, as a consequence of the Government's manoeuvring, and as a consequence of the British Aerospace takeover, Rover Group should go out of business after five years, and we should no longer have a volume car manufacturer in this country under British ownership, from that moment we would become the one advanced industrial country to have given up that capacity. Already, we are at the bottom of the league of the G7 countries. We have already been overtaken by Spain in terms of car production. If we were to lose the Rover Group as the last British-controlled volume car manufacturer, we would be left without any capacity whatsoever in that crucial sector of our economy. We would have departed from a major technology and we would be unable to control the future direction of what traditionally, and for very good reason, has been regarded as the linchpin of a modern industrialised economy.

Mr. Roger King: Rubbish.

Mr. Gould: I invite the hon. Gentleman to intervene. From a sedentary position he comments that that is rubbish. Perhaps he can explain, if we retain no indigenous capacity whatsoever and if our car manufacturing is entirely that of a branch production line, and a satellite economy, how from the national viewpoint we will control that new technology, new capacity and the whole hinterland of industrial activity that depends on motor car manufacture.

Mr. Tony Marlow: Will the hon. Gentleman give way?

Mr. Gould: Yes, by all means. Of course I was not referring to the hon. Member for Northampton, North (Mr. Marlow) a moment ago, but if he wishes to rush to the defence of his hon. Friend I am delighted to allow him to do so.

Mr. Marlow: I am doubly grateful to the hon. Gentleman for his courtesy. Does he consider that to stop what he would consider terrible things taking place, with which he is trying to frighten us at the moment, the next Labour Government, which he believes might come to pass, would immediately renationalise the Rover Group?

Mr. Gould: I can do better than that. I can tell the hon. Gentleman our response to a real and actual situation. We believe that there is absolutely no case for changing the ownership of the Rover Group. Evidence shows, and the record shows, that it has failed under private ownership and prospered as a consequence of taxpayers' investment under public ownership, and very grave risks are being taken quite unnecessarily and quite unjustifiably in disturbing its present ownership.
It is all too obvious that none of that matters to the present Government. I am not surprised that they are unwilling to be challenged on this point. They are concerned only with their ideology. If the worst comes to the worst they want to say that it is not their responsibility. Their sole concern is to get shot of that industry and to offload Rover Group so that they can say in future that it is entirely a matter of market forces and commercial considerations as to whether that indigenous industry survives.
It so happens that I have been passed a confidential document produced by the Conservative research department. It is a long document and is rather boring and uninformative, but it begins with a very interesting statement which I shall read to the House:
The takeover of Rover by British Aerospace offers a quick and attractive way of fulfilling the Government's commitment of returning the Group to the private sector.
I invite the House to notice the word "quick". That immediately and accurately sums up the flavour of what the Government are about. They are looking for speed, ease and lack of responsibility. It reinforces my contention that they are concerned simply with getting shot of the industry irrespective of the possible consequences to our economy.
Let me make it clear that we are committed to the future of the industry. We believe that it is important that this major industry should remain in British hands. We believe that, notwithstanding the remark of the hon. Member for Birmingham, Northfield (Mr. King), it is important to our industrial future, that we should retain that industrial capacity. I am astonished that anyone representing a midlands constituency should argue otherwise. No Government can escape their responsibilities for protecting and preserving that industry and giving it the chance to prosper and survive. The Government have a responsibility not to ensure profitability of a given company in a given year, but at least to ensure that we retain an essential industrial capacity. If that industrial capacity did not survive, it would have to be regarded as a failure of Government policy.

Mr. Roger King: I have been listening to the hon. Gentleman with keen interest and I have yet to hear an argument why we should riot privatise the existing Rover Group. If we consider the examples of privatisation within the car industry—Jaguar is a fine example—we can see exactly the benefits of privatisation. Nothing except taxpayers' money has helped Rover Group since it was nationalised. It has not developed in the way in which Jaguar has developed in the private sector. Presumably the hon. Gentleman would condemn the privatisation of Jaguar as a complete failure.

Mr. Gould: Anyone looking at the record in that sector of British industry would be bound to conclude that under private ownership it would have foundered, and it very nearly did founder. Public ownership came to its rescue and public ownership has maintained that industrial capacity. The last time that we debated these matters, my hon. Friend the Member for Coventry, South-East (Mr. Nellist) pointed out that if we are to go through a catalogue of the privatisation of various parts of British Leyland, or whatever it may have been called at the time, we have to consider Coventry Climax, Alvis and Self-Changing Gears. Those companies have disappeared and if we are not very careful exactly the same fate awaits Rover Group. Opposition Members want to make it very clear that it is the Government's responsibility to avoid that. In proposing to change the ownership of Rover Group for reasons of dogma alone they are taking a quite unjustified risk with the future of that industry.

Mr. Robert Hayward: Will the hon. Gentleman give way?

Mr. Gould: No. I have a feeling that the hon. Gentleman is going to return to an arid issue which concerns some hypothetical question, when what we are intent on debating is the future, in hard practical terms—

Mr. Hayward: Will the hon. Gentleman give way?

Mr. Gould: No. I wish to press on with my speech.
There is no case for changing the ownership of Rover Group. As I said on 4 May, given the likelihood that it will happen, Opposition Members are realists and do not wish to do or say anything that would jeopardise the future of that group, and particularly of the industrial capacity and employment it provides. But we have the right to put to the Minister the legitimate concerns that we feel and that are shared by many others beyond this Chamber as to whether the deal provides the assurances that we think are necessary if the future of the Rover Group is to be guaranteed.
We are unimpressed, as are most of the experts who have commented on the matter, by the arguments about synergy. As I said on 4 May, we think that that is an attractive and fashionable term which no doubt comes out well in glossy television advertisements, but if one talks to the production engineers and the experts in the industry, they will confirm that synergy is an extremely elusive advantage. Let us set aside as being mere adman's babble the notion of synergy. No case in industrial logic has been made for the takeover. Let us now consider a much more important question.
We should consider whether the deal, if it goes through, will provide the investment that the Rover Group will need desperately if it is to survive as a volume car manufacturer. The best estimate is that it will need about £1 billion during the next four or five years. We are entitled to ask where the money is to come from. Where will that investment be generated?
When Roland Smith and others from British Aerospace said that they believe that the investment will be generated by Rover, they were living in cloud-cuckoo-land. Rover may have moved briefly into profit—that is a considerable achievement that owes a great deal not so much to the highly lauded Graham Day as to an excellent and dedicated work force who have put in a great effort for a long time—but the profit was about £27 million. There is little guarantee, for reasons that I shall come to, that even that level of profitability can be guaranteed, and it is inadequate to generate anything like the investment that will be needed if Rover is to develop the new model lines that will maintain it as a volume car manufacturer.
I suspect that when the attempt is made to convince us and others that the deal will provide the necessary investment, given its implausibility, what we shall really be told is that the deal is not intended to produce a continuing capacity in volume car manufacturing. That is what I think is in the mind of British Aerospace and of Graham Day, and it is what we are intended to assume from these highly incredible assumptions. Rover, with 15 per cent. of the market, is too small and not profitable enough to generate its own investment for the time being.

Mr. Roger King: What about exports?

Mr. Gould: We should consider what is likely to happen to our ability to compete in international markets. Like British Aerospace, Rover is directly affected by movements in the exchange rate. Indeed, Rover is much

more sensitive and vulnerable to movements against the deutschmark than is British Aerospace, which is much more concerned with movements against the dollar.
Rover's ability to compete, and its profitability, will be and are being gravely affected by the pound rising against the deutschmark. There can be no doubt about that, and any Industry Minister worth his salt would be the first to say so and to argue, against his Treasury colleagues, that the rise in the exchange rate is doing great damage to important British industries.

Mr. Dave Nellist: Is my hon. Friend aware, as I am, that British Aerospace has in the past few weeks had to set aside £320 million to combat the effects of the changing value of the pound against the dollar? Since our debates on this topic on 4 and 12 May, British Aerospace has announced 1,100 redundancies at Filton in Bristol, so when it comes to investment and job security, aerospace and car workers are fearful and apprehensive about this privatisation, sell-off and false merger.

Mr. Gould: My hon. Friend is quite right. I shall come back to British Aerospace in a moment. We ought to be clear, however, that Rover is being adversely affected by exchange rate movements.

Mr. Phillip Oppenheim: Will the hon. Gentleman give way?

Mr. Gould: No. I have given way quite a lot already.
There are other developments in the pipeline that are equally worrying for Rover's profitability. If, for example, EC standards on exhaust emissions are adopted—I recognise that the Government have done all they can to resist them, but I suspect that it is in the nature of things that we shall get them in the end—Rover's profitability will disappear in a puff of exhaust smoke as it will find it expensive and difficult to convert its present model range to meet the new standards. [HON. MEMBERS: "That is nonsense."]
The hon. Member for Northfield asked about Rover's performance in international markets. The British market is very important to Rover. It has only 15 per cent., but it is by far its biggest market. After a welcome improvement which led to the share of imports in the British market dropping—miraculously one might say—to 49·5 per cent. last year, it is running at 54·5 per cent. this year. Last year was the first time for many years that imports fell below 50 per cent. of the market. Import penetration this year, however, is on the way up again and will cost us £1·4 billion on our balance of payments. That is the effect of the exchange rate on Rover and its profitability.
I shall return to the central question with which I wish to confront the Chancellor of the Duchy. If Rover needs, as it clearly does, substantial investment during the next four of five years to stay in business as a volume car manufacturer, where is the money to come from? It will certainly not come from Rover. Is it to come from British Aerospace? It too is most certainly unable to provide the investment. It has its own problems.
Last week, I visited the excellent British Aerospace plant at Chester. I saw the wonderful work that is being done there. Great investment has been made in Airbus wings and on the HS125. It is a most impressive plant. It was impressed on me—quite innocently, as my hosts were not to know that we would debate these matters in the next


few days—that the development and the investment were immensely expensive. Millions of pounds are being invested in new equipment which was being installed even while I visited the factory.
That investment has embarrassed British Aerospace in terms of its cash flow. It cannot generate anything like the investment needed for Rover. Indeed, it probably cannot generate any investment as it needs help itself. I am sure that the Chancellor of the Duchy will confirm that it has been to the Government to ask for help to cover for losses now staring it in the face on its Airbus work.
The losses have arisen for exactly the same reason as Rover and every other sector of British manufacturing industry has been embarrassed recently—the exchange rate has made the Airbus and work on it extremely unprofitable. It is not just Airbus that is affected. British Aerospace is clear that if it is to sell civil aircraft such as the HS125 or the HS146, it can do so at a profit only if the pound stays at $1·70 or lower.
British Aerospace is having to make cuts, to seek Government help and to send hundreds of millions of pounds' worth of Airbus development on sub-contract to the United States to escape the exchange rate trap. It is short of cash, it is involved in a massive capital investment programme—for which it deserves great credit—and it has very little to sell in the short term. What does it do? It looks to somebody who at least has something to sell. Whatever its other weaknesses in the market, Rover has cars in the showroom. At the taxpayers' expense, Rover has made a great deal of the required expenditure.
We covered this ground when we last debated the subject. The likelihood—indeed, it is almost a certainty—is not that the takeover, or merger, between British Aerospace and Rover will generate a flow of cash or of investment capital from British Aerospace to Rover, for it will certainly not be anything like the volume needed to meet Rover's need for investment. The virtual certainty is that any flow will be in the reverse direction. It will occur for four or five years, which is the extent of the legal undertakings given by British Aerospace.
The £800 million of taxpayers' money which is to be given away to British Aerospace will finance the process. Far from guaranteeing any investment or any future for Rover, we find a prospect of Rover and those who work in it being guaranteed a future lasting five years, financed by the taxpayer, during which they will be milked for cash.
British Aerospace will then say that it finds it difficult to maintain volume car manufacturing, that it is happy to keep the odd bit, that it has always been interested in Land Rover and that it might be able to make a go of it—that was what it wanted in the first place—but although it was offered such an attractive deal with so much cash in hand to keep the volume car business going for a short time, it is no longer viable. Thus, the Rover Group and volume car manufacturing in this country will come to an end.
What will the Government say, if they are still in power, and I pray that they will not be? They will say, "It is all to do with commercial considerations and market forces. If we lose that important industrial capacity"—and one or two midlands Conservative Members of Parliament at the same time—"that will be something over which we shall have no control." That is what is in prospect and is the logic of the position. We shall listen to the Chancellor with interest and see what logic he advances.
That is our persuasive interpretation of the position. We are entitled to ask the Chancellor what difference the past five weeks have made. What further can he say to allay our fears?

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): Nothing.

Mr. Gould: That is extremely depressing news. On 4 May the right hon. and learned Gentleman failed to give any assurances about investment and the future of the industry. Notably, he failed to give any assurances—he repeated this performance before the Select Committee—about employment.
Those who work for the Rover Group are, with good reason, extremely concerned about their jobs. They know that, for the reasons that I have outlined, the possibility of British Aerospace remaining committed to car manufacturing is slight. They know that British Aerospace, which has no commitment to the car business, is likely to find major assets such as the site at south Cowley, which could be realised at a substantial profit, very tempting. That is the immediate danger, which is why those workers are right to be worried that they have not been given any assurances by British Aerospace or the Government.
It is generally agreed that the immediate future of the Rover Group depends to a large degree on its relationship with Honda. So far we have heard nothing more than bland and vacuous assurances about how benignly Honda looks on this arrangement. I hope that the Minister will say more about what Honda has in mind for continuing collaboration.
What about the problems that have arisen with the EC? The Minister will concede that he will have a substantial argument on his hands if he is to persuade Commissioner Sutherland that £800 million of taxpayers' money is not a hidden subsidy. It may be one thing to write off debts, hut, as the Rover Group's indebtedness amounts to no more than £560 million, the Minister will have the awkward task of explaining what the other £240 million represents. We therefore need to know what will happen if Commissioner Sutherland chooses to exercise powers under the treaty of Rome and says "No. I am not having the £800 million. I may accept £500 million or, if I am feeling generous, £600 million."
What will happen if the deal does not turn out as Professor Smith has been selling it to his shareholders? What will happen if the cash on the table is not £800 million but a substantially smaller sum? Will the deal be called off? Will Professor Smith be able to sell it to his shareholders? If the British Aerospace deal falls clown because it is vetoed by the EC, or because in a form approved by the EC it is unsaleable to British Aerospace shareholders, what will be the Government's fall-back position? What guarantee will they give that the Rover Group will stay in business? What are its other prospects? Who else has been interested? What other bids are likely to come forward, and how serious are they?
We need to know the answers to those questions because the Government have unwisely put all their eggs in the British Aerospace basket. To listen to Government Ministers one would think that there is no future for the Rover Group other than with British Aerospace. If British Aerospace departs the scene for any reason, we need to know—as does the Rover Group and its employees—where the Government will stand. Will they give a


continuing commitment to invest in the Rover Group as a public sector car manufacturing company, or is there another bidder in the offing, who has been kept at arm's length so far? If so, who is it?
The Government are always interested in the Labour party's plans. They are obliged to say what is their contingency plan. If we do not receive answers to our questions, it will be perfectly clear that the charge that I levelled at the Government—that they have no interest or commitment to the maintenance of the industry—will be proved to the hilt.
We must not forget that British Aerospace is at risk as a consequence of this deal. It may be dragged down, as have others in the past, by its association with the less profitable parts of the British car industry. Those who work for the Rover Group and British Aerospace are concerned about their future.

Mr. Hal Miller: The hon. Member for Dagenham (Mr. Gould) is not backing Britain.

Mr. Gould: I am backing Britain, but I want assurances, guarantees and some evidence of commitment from the Government to the maintenance of the industry. I want the issues to be debated properly and developed. We have not been given any commitment, assurance or guarantee but a solution that, in the words of the Conservative party's research department, is a "quick" one, a quick fix. It may be attractive to the Conservative party, but it is not to those who want a flourishing British car industry or those whose livelihoods depend on its existence.

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): I beg to move to leave out from 'House' to the end of the Question and to add instead thereof:
'believes that the recent improvement in Rover Group's performance owes much to the efforts of the workforce and management combined, that further improvement can best be achieved by returning the business to full private ownership, that the proposed takeover by British Aerospace is to be warmly welcomed and is in the interests of Rover Group's employees as well as those of its suppliers and dealer network, that future investment should be a matter for the management of the business and the prospective new owners, and that the overall terms of the sale agreement are in the interests not only of the companies but also of the taxpayer.'
This is an Opposition Supply day and they have chosen the subject for debate.
The hon. Member for Dagenham (Mr. Gould) began by giving a brief explanation of why we are again discussing the Rover Group. We had a full debate five weeks ago about the agreement between British Aerospace and the Rover Group which is conditional on the conclusion of negotiations with the European Commission. Subsequently it will go to an extraordinary general meeting of British Aerospace shareholders.
The hon. Gentleman asked me to update the House about the events of the past five weeks, but there have not been any; we are having the same debate as we had five weeks ago. As we made clear at that time, we trust that discussions with the Commission will be concluded before the summer. As yet, they have not been, so there is little

point in my again explaining the terms of the agreement, which I believe I explained to the satisfaction of most hon. Members in the previous debate.
A wide range of subjects could have been chosen if the Opposition had wished to continue their ideological obsession with the nationalisation of large parts of British industry and their objections to privatisation. At present, we are returning to the private sector the Rover Group, the British Steel Corporation, most British shipyards and Girobank. By returning to the agreement with British Aerospace, the Opposition have returned to the most popular and least controversial of our proposals. Contrary to the description that the hon. Member for Dagenham seemed to be giving, British Aerospace is a popular and successful company. I believe that there has been a widespread welcome for our proposals.
We are able to return those companies to the private sector because of the general well-being of the British economy and because the Government have given the managements of most of those companies their head and allowed them to apply commercial judgments to succeed in the market place. Those companies are now in a position to return to a booming and successful private sector economy.
The hon. Member for Dagenham said that he had returned to the subject of the car industry for this nationalisation versus privatisation debate because of his concern about this sector of the economy in general. He earlier expressed a fear about the chocolate-making industry and said that we are becoming a branch-line economy and moving out of the mainstream of important manufacturing industries. It is singularly ill-timed for him to make comments of that sort about the United Kingdom vehicle industry, into which the Rover Group is about to return as a private sector company. We have had a good time in the United Kingdom vehicle industry over the past year or two. The outlook for all our companies is better than it has been for a long time.
Let us look at the last complete year, 1987, to see what sort of environment British Aerospace is seeking to buy into. In 1987 we saw the highest production of cars in the United Kingdom for nearly a decade. Productivity in the vehicle industry has increased by almost 7 per cent. each year during the 1980s. That compares with the impressive enough record of nearly 5·5 per cent. a year in manufacturing as a whole. Import penetration continues to decline.
The hon. Member for Dagenham is concerned about short-term fluctuations in the exchange rate and the strike at Ford. Those issues have been the basis of his concern over the past couple of months. More new United Kingdom-built cars were registered in 1987 than in any year since 1973. Seventy per cent. of Ford's and Vauxhall's United Kingdom car sales last year were sourced from United Kingdom factories. Our export markets are being regained. In 1987, the value of United Kingdom car exports increased by 45 per cent. over 1986. There is a general rise in industry's profitability and we are in the splendid position—one in which we have not found ourselves for a long time—that all our major vehicle manufacturers are now in profit. It has been a long time since any Minister has been able to say that to the House.

Mr. Oppenheim: If the British car industry is so successful and if, as we have been told ad infinitum, we are great believers in the rather well-worn level playing field,


and if the Government believe in the free market, why do we maintain the ludicrous so-called gentleman's agreement that puts an import quota on Japanese cars when it indirectly benefits the Japanese car industry by giving it a high-priced, cosy and uncompetitive market to sell into, when it compounds the inefficiencies that remain in the British car industry and when it costs consumers dear?

Mr. Clarke: That, as the saying goes, is a very interesting question. I would welcome the opportunity on a more suitable occasion to discuss the balance of argument between those who believe that the agreement protects the British car industry and those who believe that it gives the Japanese a rather easy way of making money. I agree with my hon. Friend that it is an interesting debate, but it is outside the scope of the Opposition Supply day.

Mr. Gould: I hope to put a question to the Chancellor that he will find easier to answer. When we debated this matter on 4 May, the right hon. and learned Gentleman made the unwise claim that Rover had secured record exports. It then emerged that he was claiming that that was true in money value. That it hardly a reliable basis. Will he now confirm that on the only basis that matters, which is the number of vehicles, he was wrong?

Mr. Clarke: The hon. Member does not have a very good record on answering questions. It is true that I was talking in value terms, and it was a record year in value terms. In one previous year it was better in terms of the number of vehicles. Nevertheless, the export record of the Rover Group now is very good and is going very well. As I have said, the export performance of the British vehicle industry is very good.
The background for privatisation is propitious. It is not a quick dash, at an ill-judged moment, for the Government to decide that this is the time to conclude a reasonable deal with a good British company—British Aerospace—which is interested in acquiring the Rover Group.
The only thing on which I agree with the hon. Gentleman is the congratulations he gave to all those responsible for the improvement in the performance of the Rover Group that has brought us to this stage. We all welcome that. It has been achieved not simply because the company is nationalised but largely because, although it is nationalised, the Government gave the management the freedom to run its own business without political intervention of the sort it had experienced in the past and enabled it to embark upon the major restructuring and fundamental reappraisal of the company's position that was necessary to return it to health and to provide what the customer wants. I am happy to join everybody in the House in commending the work force as well as the management of the Rover Group on the progress that has been made in order to reach the position that enables us to take the next step towards privatisation.
The Labour party's motion and the views of the hon. Member for Dagenham, apart from implying that the Labour party would prefer to return to the nationalisation of the past, present a number of other myths about the present state of the Rover Group, what its strategy should be and where it is going. The Social and Liberal Democratic party's motion is more accurate than the Labour party's. It appears to accept the repeatedly stated strategy of the company, which is that the Rover Group is not now and never will be a stand-alone volume car manufacturer along the lines of the six major European

producers. Unlike the Rover Group, with its 500,000 or so vehicles a year production, the other six each turn out over twice that number of cars. Those firms enjoy economies of scale that are not available to the Rover Group and it is not open to the Rover Group to try to replicate their market strategies. That was a false analogy made by the hon. Member for Dagenham.
Under Graham Day's leadership, the Rover Group is pursuing an extremely good alternative strategy that is not based on running down the business. It is using progressive evolution of the product plan to take the business up-market and into specialist niches. It is building on the vital collaborative relationship with Honda. It is true that Honda has confirmed that it welcomes the continuity of management that the deal with British Aerospace represents. It is content with what is proposed. Also, the Rover Group is seeking further to improve its quality compared with other manufacturers. It has to win back its reputation for quality and reliability, and I am sure that we are all confident that it will do so.

Mr. Nellist: The Minister and I agree on one thing and that is that he has accurately stated Graham Day's position. I do not expect the right hon. and learned Gentleman to read the entire report of the Adjournment debate that his colleague the Minister and I had on 12 May. However, in that debate, I quoted Mr. Day as saying:
We want to make money. People keep talking of market share, but the objective is to become profitable."—[Official Report, 12 May 1988; Vol. 133. c.578.]
As my hon. Friend the Member for Dagenham (Mr. Gould) said, it is not about continuing volume car production, which is the only safe guarantee of the jobs of car workers.—[Interruption.]
When the right hon. and learned Gentleman gives figures about exports for the British car industry over the past couple of years, he is basing those figures on the artificial boom that we have had in the past couple of years in the British economy and on a specific set of exchange rates between sterling and the dollar. Given that Land Rover, Range Rover and Jaguar—[Interruption.] I can do without any more interruptions. Given that Land Rover, Range Rover and Jaguar export between 50 per cent. and 60 per cent. of their production, will the right hon. and learned Gentleman make the same boast for the next two years and say that the Japanese investment in America, Europe and Britain will riot mean retrenchment in the volume of production and the jobs in the British car industry?

Mr. Clarke: The hon. Member for Dagenham made it clear that he was pessimistic about the prospects of the Rover Group being profitable. He seemed to think that that was a temporary aberration. The hon. Member for Coventry, South-East (Mr. Nellist) does not even want Rover Group to aim to be profitable. He dismisses the strategy set out by Graham Day which aims to enhance its profitability. He obviously contemplates volume car production regardless of profitability and joins his hon. Friend the Member for Dagenham in the most dire forecast. I am not sure whether either of the hon. Members is converted to joining the European monetary system for exchange rate stability of the sort they talk about. It would be extremely unlikely in the case of either hon. Member. However, the future of the business depends on


successfully carrying through a strategy aimed at profitability and selling into a part of the market place in which the Rover Group has a realistic chance of surviving. That is what Graham Day has done.
Jaguar was a bad example. The hon. Member for Coventry, South-East objected to Jaguar being privatised. Since privatisation, Jaguar's production and sales records have been broken repeatedly. It has introduced successful new models such as the XJ6 and the convertible XJS and employment has increased by 2,500. Productivity has risen threefold since the early 1980s. As the hon. Gentleman knows, it has recently opened its own engineering centre. In the face of that experience, it is no good saying that we have been through a temporary boom and that we will return to a state of decline soon. That may be what he wishes for political reasons, but it is not what is happening now.

Mr. Nellist: I am grateful to the Minister for allowing me a final question. What price is he prepared to pay for those figures from Jaguar? Does he have the same attitude as the hon. Member for Birmingham, Northfield (Mr. King)? In a six-week period at the end of 1987, 17 track workers at Jaguar in Coventry died of strokes and stress-related illnesses because of the speed-up on the production line, which has since been exacerbated by Jaguar management to compensate for the worsening relationship between the dollar and sterling. Is that the price that he is prepared to pay for profit—that magical word?

Mr. Clarke: Death from a stroke or heart disease is a serious matter, so I shall not make the flippant reply that I am tempted to make. In fact, the performance of Jaguar has increased employment in the company by 2,500. I know that the hon. Member for Coventry, South-East believes that one should increase employment in manufacturing industry by getting everyone to work less—either by working shorter hours or retiring earlier or by slowing down the track so that extra workers need to be taken on.

Mr. Nellist: indicated assent.

Mr. Clarke: The hon. Gentleman agrees. That is not the future for British industry. It is a crazy way of trying to create jobs and we have found a better way, which is to put vehicle manufacture in private hands in thriving market conditions.
If we follow successfully the strategy upon which Graham Day has embarked—that will depend on markets and the company's performance in those markets—the company should and will prosper. It is not a strategy for contraction. High specification vehicles give more opportunity for added value by the assembler. In addition—this is extremely important for the midlands—they give more opportunities for the component suppliers which are also major employers and which, I may add, are major supporters of the proposed agreement with British Aerospace.
The Opposition's other serious concern, referred to in the motion, is the future of Rover's model range and investment. I do not propose to join the hon. Member for Dagenham in speculating about capital investment in future years. Our whole point is that Ministers should not

be laying out their stall on such matters, and I shall certainly not give information relating to the nationalised company that would help Rover Group's competitors. However, if hon. Members seek reassurance about the product range and investment I can point to the facts now.
Rover has recently added to its investment in the executive sector with the launch of the new fastback range derived from the Rover 800 saloon. Rover is building on the welcome collaboration with Honda with the development of a new mid-range car, the production of which will significantly increase employment at Longbridge as Mr. Day announced two weeks ago—no doubt to the delight of all the hon. Members, especially my hon. Friend the Member for Northfield, who have an interest in the success of the motor industry and Longbridge in particular.
Rover Group is following up its major engine investment in the 2-litre sector. As we all know, its M16 engine is an award-winning engine. It is used in the 820 range, and has just won the added distinction of being selected for the Morgan sports car. In addition, the Rover Group is developing a new high economy small engine, the K series, which will strengthen Rover Group's presence in the small car market. Those examples—I deliberately cite only information so far made public by the company—highlight the major investment programme that is under way in the Rover Group.
The tenor of the Opposition's case is to denigrate all that. They say, "It is a temporary achievement. The company has got so far only because it happens to be in public hands. Only in public hands can we achieve even temporary improvement and the outlook now is extremely gloomy and difficult." In fact, the present strategy is being backed by the proposed purchasers. British Aerospace has made public its general support for the future plans of Rover Group under Graham Day. On the information that I have, I do not expect fundamental changes in either the magnitude or the broad direction of Rover Group's investment following the change of ownership. However, those decisions on investment must be for the management of the business and the prospective new owners of the company to determine. Market changes will dictate some changes of emphasis from time to time, as they have in the past. It is precisely to give the company flexibility to respond to the market that we want it to get away from the rigidity of public ownership. We think that the industry will benefit from that.
Now that we have returned the motor industry to reasonably good health, it is most important to build upon that by setting it free from Whitehall and Westminster and removing it from the political limelight. If we possibly can, we want to avoid a return to the public sector ownership and state-directed investment that we had in the 1970s. If that was really the answer—as Opposition Members clearly believe it is—we should not now be living with the sorry fact that £2·9 billion-worth of public money, which is more than £50 for every man, woman and child in the country, has had to be put into the business since the mid-1970s. That kept the company going through the losses incurred during nationalisation until we began the process of getting the company ready to return to the private sector. We are determined to put that history behind us completely and we believe that the deal negotiated with British Aerospace gives us that opportunity.
I am not quite sure of the Opposition's view of the agreement with British Aerospace. At one point the hon. Member for Dagenham realistically accepted that the deal was likely to go ahead and that Rover is likely to be privatised. He disputed the idea that there was synergy with British Aerospace. At least he does not accuse British Aerospace of being foreign, so we have not quite gone back to the chocolates debate. What kind of company would he prefer us to be dealing with? Does he have a view on foreign car companies that might have synergy with Rover being interested in taking over the company? He claims that he is worried about the company's cash flow and the future need for capital. That rather contradicts what he says about the financial agreement with British Aerospace. Does he, or does he not, think that it is a good thing that £800 million should he used to pay off the likely indebtedness at the time of the completion of the sale? He argues that that £800 million is too much and should be reduced. That is not altogether consistent with his argument about the imminent cash-flow problems of the newly merged company and the need for a proper balance sheet for the future.
It is important—and it should be important to the Opposition—that we make it clear to the European Commission that the deal has been arrived at on a reasonable basis. I shall not go over the terms again because the debate is short and I gave a full explanation when we last discussed the matter. However, when evaluating the financial arrangements, it is important to remember two things that demonstrate the bargain from the taxpayer's point of view, as the taxpayer has had to stand all the losses in the past. First, we achieve the prospective elimination of the contingent liability represented by the Varley-Marshall assurances—£1·6 billion-worth of contingent debt that still faces the taxpayer. Secondly, we eliminate the excessive carry-over of tax losses. After the previous debate I hope that we have helped hon. Members who had difficulty in understanding that extinguishing a tax loss is a benefit to the Exchequer and not a benefit to the company, which would otherwise carry the benefit of those past tax losses.
The Government remain clear—as we were five weeks ago—that the deal should bear examination by anyone. At this stage, we think that the deal should be allowed to continue and that the Rover Group should certainly not risk damage from ill-informed public comment and speculation of the kind in which the hon. Member for Dagenham wanted me to engage. It is in the interests of the company for the agreement to be concluded and for Rover Group to go into the private sector and to continue the strategy that it has set itself, which we trust will enable it to he successful in the market place, as it has been over the past year or two.
As I said at the outset, this is the most popular and welcome of our privatisation proposals. It arouses the least controversy with the work force and, indeed, anyone else. I cannot understand how the hon. Member for Coventry, South-East can think that a large number of Rover Group's workers are hostile. To the dealers, the agreement is welcome as compared with the speculations of the past. The component suppliers welcome the agreement, as does most of the work force. The principal trade unions involved with Rover Group have made clear their fundamental wish to make the deal work, and that should be the aim of all of us now. The Labour party remains almost isolated in its completely negative attitude to the

idea of returning companies to the private sector. It is very out of touch on this subject, and I believe that now that it has given us the opportunity to vote the House will support the Government's amendment.

Mr. Ken Eastham: The Minister said that the debate was ill-timed. I appreciate that the Government are embarrassed that the Opposition have chosen to use a Supply day to debate such issues because they would like the deals to go through in stockinged feet. They do not want public accountability. They would prefer the Opposition to say nothing so that they can carry on with their little deals with various organisations.
The Minister said that he did not believe in planning. The Government often refer to the success of Japan, yet anyone who has visited that country knows that it believes in planning the economy. That has been the root of its success and is a serious problem for its competitors.
People seem to talk only about high finance, and this debate is no exception. I remind the House that behind any company are the workers. They are not simply pushing around money and exchanging pieces of paper; they are investing their lives. Any major changes in their companies affect not only them but their families. Any changes in the motor industry affect thousands of families, because it is one of Britain's most important industries.
I declare an interest, as I worked in the engineering industry throughout my life before I entered Parliament. I am a member of the AEU and secretary of the parliamentary group. A great number of our members depend on the industry for their livelihoods. It would be interesting and refreshing if, for a change, the Government showed a little more sympathy to those who create our wealth. I remind the Minister that most of the wealth in Britain has been contributed by the engineering industry—power engineering, the aircraft, shipbuilding and motor industries and numerous other industries. Engineers have paid a high price and made a great contribution to the wealth and the profits of this nation.
The Opposition are concerned not only with money but with the future of industry. The Minister's statement a few weeks ago highlighted a great lack of consultation. When making their little deals, the last people whom the Government consider are the workers. Their contempt for them is percolating through the system and there is no longer any respect for the work force or for the trade unions. Yet when the Government find themselves in difficulties, they want trade union organisers to bring sense and stability into industry.
There was no consultation about the sale of the Rover Group. The Minister said that the work force wanted it, but how does he know that? How does he know that, to a man, the work force want a takeover—[HON. MEMBERS: "Or do not want it."] Indeed. I am sure that the Opposition have more information on that than the Government have because we talk to our members.
When television interviewers take cameras to the factory gates, they ensure that they speak to two in favour and two against, so that all those watching television think that the views are equally balanced. However, the interviewers often have great difficulty finding anyone sympathetic to the Government's policy. They present a distorted view.
There were moves to sell Land Rover to General Motors about two years ago, but there was a public outcry and great indignation about the proposed sale. It was also feared that Austin Rover would be sold to Ford or some other foreign company. The Government finally had cold feet in the face of that public outcry, and they backed off. Since then, they have been seeking other ways to achieve their objectives.
If the company is to be sold to British Aerospace, what guarantees will there be that British Aerospace will not suddenly decide to sell it into foreign ownership? The Government will say, "It is nothing to do with us; we do not own the company; we have no influence over it; it is market forces." What the Government were seeking to achieve two years ago may well happen when the company has been privatised, and the work force is entitled to know about that.
During the past nine years it has been noticeable that the Government have never thought the producers of our wealth to be important. They glorify the buyers and the sellers who produce nothing, who simply push around pieces of paper and sell stocks and shares. It is yuppie land. The Government glorify money. They think that that can continue for ever, even though they had a shock last October when there was a sudden realisation that those pieces of paper had to be backed by production. We must manufacture goods. This country is dependent upon engineers, not people in the stock exchange pushing around pieces of paper with little thought for the future.
Thanks to the Government, this country now imports far more than it exports. That is a direct consequence of the Government's empty policy that is passed from one Minister to another. They always put off the ultimate. The future of British wealth lies in production, and investment is an important aspect of that. The Minister made snide remarks about £50 per head of investment in the industry, but he would not dare tell us how many billions has been put into farming—into food which we cannot consume and which is sold abroad, such as cheap butter to Russia. It is a rather jaundiced comparison. The Government say that the engineering industry is too expensive, but they dare not say that about keeping the farmers on their Back Benches fat. It is simply a matter of personal interest that should be exposed.
Perhaps the Minister would ask one of his staff to find out the extent of the subsidies paid to farming. I dare him to give us the figures tonight. He may smile, but I know that he dare not tell us. Perhaps he would like me to go to the Library to get the figures for him, but will he repeat them? I know that he will not. He wants only to talk about some massive subsidy to the engineering industry, yet it is only chickenfeed. We should be investing more in that industry, like our major competitors, the Japanese.
The workers are entitled to a decent deal and to full consultation. It is about time that there was less contempt for the work force and some recognition of the valuable contribution they have made and could continue to make to Britain's future wealth.

Mr. James Cran: This debate graphically illustrates why we should get as many companies as possible out of the public sector. When Mr. Graham Day

gave evidence to the Select Committee on Trade and Industry he alluded to the point that any company in the public sector—and I know that my right hon. and learned Friend will understand this comment—is lectured by Ministers and by civil servants. Here we are having a debate in the House. At the end of the day, it will not add much to the sum of knowledge as to what we should do with the company.
This debate is unfortunate, as was that in the Select Committee. The Rover company historically has been susceptible to uncertainty about its future. It is not just me who says that. In 1986, when there was speculation of a bid by Ford—and there have been a few rumours generated this evening by Opposition Front Bench spokesmen—£250 million of sales were lost and were gone for ever. The company also lost 2 per cent. of its market share and only now, two years later, is it beginning to get it back. That is exactly what we should try to avoid in debating this matter in the House—which proposition has not been accepted in the speeches made by Opposition Members thus far.
The Government could have invited bidders for the company in the same way that they have in respect of Girobank. However, that in itself would have resulted in exactly the kind of uncertainty to which I have just referred and which arose in 1986. In that regard, the advice of Mr. Graham Day, Rover's chief operating officer, was fairly crucial. If the Government had ignored his advice, that would have jeopardised the future of a great company which everyone wants to see rejuventated, and which is partly on the road to rejuvenisation. I cannot imagine that any hon. Member wants to see the status quo continued, and so we must consider the three alternatives left to the Government.
The first was acquisition by a competitor. That could have given rise to the 1986 situation, which no one in the House would want to see happen. The second was placement or flotation. There is no doubt but that that could have been possible. However, it must be remembered that Opposition Members would then have to deal with a factor which none of them mentioned: the company's accumulated historical debt would have to be written off. That was perfectly clear to the Government and would have been to any Government. The third alternative was acquisition by a non-competitor. That is what Graham Day and his board—and this was said in the Select Committee—recommended to the Government. If the men whose hands are on the tiller of the company, and who have worked wonders with it, make that recommendation, the Government would need an extremely strong argument against doing exactly that. In my judgment, the Government were perfectly correct in giving exclusive rights to British Aerospace.
Rover could operate as an independent company, but it was made clear to the Select Committee that there were a number of advantages in going in with British Aerospace. I will not indulge in a discussion about synergy; that is an argument which has been the subject of far too much hot air. If one considers the businesses within British Aerospace, there is not necessarily a great deal of synergy among some of their component activities. However, if one takes them altogether, they add strength to the total business as it is today.
I have not heard controverted the advantages described to the Select Committee. The first was that of size. Anybody who operates in the international engineering business knows that size is extremely important. We are


meeting that requirement by bringing together large, multinational companies which, although they are in different businesses, and operate within different business cycles, will ultimately strengthen the overall group. I have heard nothing from the Opposition which controverts that suggestion.
Much has been said on the subject of investment. I will not say that if the company goes into the private sector, everything will be guaranteed for years hence. However, it was made very clear by Professor Roland Smith that his board accepted the five-year corporate plan. He did not evade it. That plan, as anybody who has studied this matter knows, involves investment of £1 billion over the next four of five years. Professor Smith did not evade that responsibility but clearly acknowledged it.
At the end of the day, Rover is being taken over by a British company. Of course there can be no guarantees for years hence, but as matters stand Rover is being taken over by a British company. By golly!—I can imagine the outcry there would have been from the Opposition if the Government had come forward with a takeover proposition from a foreign company. I would not have been one of those arguing in support of that proposition, but there is in the British takeover a benefit that the Opposition have not recognised.
I wish to re-emphasise a point made by my right hon. and learned Friend when he commented that the response to the proposed takeover has been positive all round, except from the Oppposition. Perhaps that is predictable because Oppositions have to oppose, and that is exactly what they are doing. That is why we should all discount what the Opposition have to say on the matter. As was said by my right hon. and learned Friend, the dealer network is extremely pleased with the proposal that has been put before it. The network employs 31,000 people, many of whom are in the constituencies of Opposition Members who are opposing the takeover. The turnover of those dealers totals a massive £4 billion plus. That is the importance of the dealer network, which is delighted with the arrangement worked out between British Aerospace and Rover.
I have also taken the trouble to speak to many of the 1,600 suppliers, who are also delighted at the arrangement. I remind the Opposition that those suppliers enjoy orders of £1·6 billion. Again, many of them may be in the constituencies of Opposition Members. I refer also to Honda, about which we have heard nothing this evening from the Opposition. Honda has a collaborative agreement with Rover, which it could have severed as a result of the takeover. Has it done so? Of course not. In the Select 'Committee, Professor Smith stated that in conversations with Mr. Kume, Honda's chairman, he said that he was delighted with the arrangement and is prepared
to go forward step by step
with Rover. That shows a level of confidence in the company that is not shared by the amateurs on the Opposition Benches—although I accept that there are amateurs on the Conservative Benches as well, which is precisely why company business should be debated in board rooms rather than in the House.
I strongly believe that the taxpayer should also be delighted at the arrangement. Opposition Members have said that 2·7p per share is not much, and indeed it is not a very high price. But those of us who remember Austin Rover a year or two ago will recall that the shares were

worthless: they were paper money. Opposition Members who have suggested, not here but elsewhere, that the shares have been traded on the open market at 55p to 60p—and indeed they have—should remember that the board of directors has repeatedly pointed out to shareholders that the underlying asset value did not support that price. The board went out of its way time without number to say that. Given the historical circumstances—the debt and the underlying asset value—I believe that the price is right.
I shall not blush when explaining to my constituents or anyone else that the Government are having to put a cash injection of £800 million into British Aerospace. Those who argue the proposition have conveniently forgotten about the company's accumulated historical debt. That debt is pretty massive, and the company would not have been a marketable proposition unless the Government had been prepared to cover it. This is not working capital, as has been suggested on other occasions by some Opposition Members. It is to pay off a historical debt. No other circumstances would have been possible, whichever Government had decided the future of the company and whichever disposal option had been chosen.
As my right hon. and learned Friend has mentioned, the taxpayer benefits from the £1·1 billion accumulated trading losses surrendered by British Aerospace. Who on the Opposition Benches, or anywhere else, will say that this great company is not capable of making the profits that it should make in the future? I believe that it can, because of the design and type of vehicle that it is now producing, which strikes me as what everyone wants to buy. And if the company makes profits, the taxpayer stands to save £400 million in the coming years. That too has been conveniently forgotten by the Opposition, but not by Conservative Members or, I suspect, by the taxpayer.
The Varley assurances meant a Government standing behind a company, prepared to pay for all its losses whatever the circumstances. How can Opposition Members possibly defend such a position, which allows a company—board of directors, management and work force—to care nothing about efficiency in the market place because Government and taxpayer stand guarantor to every penny that it loses? That is a heinous arrangement, and I applaud the Government's package, which ensures that such obligations will cease.

Mr. Roy Hughes: Does the hon. Gentleman agree that there is an omission from his speech? He has not mentioned the people employed in the industry. Moreover, consultation has been negligible. The hon. Gentleman also seemed to deny the right of hon. Members to debate these matters in the House. Will he not take into consideration the fact that where public money is involved it is up to hon. Members to ensure that it is properly accounted for?

Mr. Cran: I am extremely grateful for that intervention. I concede to the hon. Gentleman that I had forgotten to mention, as I meant to at the beginning of my speech, that the one part of the motion with which I agree is the statement that
Rover Group's performance owes much to the efforts of the workforce".
With that proposition I entirely concur, and I am very grateful to the hon. Gentleman for giving me the opportunity to say so.
The question of job guarantees arose during the Select Committee hearings, but Mr. Day said that no one in the market place was prepared to guarantee to buy Rover cars. That is the case with any car company, indeed any company. If there is no guarantee of purchase, there can, perforce, be no guarantee of employment. The hon. Member for Newport, East (Mr. Hughes) may be interested to learn that Professor Smith gave the Select Committee a guarantee—and he did not do so lightly; I am sure that the hon. Gentleman knows the powers of a Select Committee—that there would be no redundancies as a direct result of the merger. That does not cover the possibility that in future the public may stop buying Rover cars, but it is none the less a guarantee.
When hon. Members vote later this evening, they must not ignore what the Rover board has said. The board has said that it believes the merger to be in the interests of not only the company, the shareholders and the employees, but the creditors. Opposition Members who vote for the motion must tell us what alternative they would choose.

Mr. Austin Mitchell: Keep it.

Mr. Cran: I have heard no alternatives being suggested. It is all debate and no answers.

Mr. Mitchell: Keep it!

Mr. Cran: What this arrangement gives the company is stability. For far too long, the company has been susceptible to debates of this kind in the House and to snide comments from Opposition Members and many others. What it needs now is to be left alone, like the divine Greta Garbo, to get on with the job that it has set out to do. I believe that it will do that, not only because it is Britain's biggest vehicle manufacturer but also—this too is forgotten by many—because of the £4·27 billion that it puts into not only the south and west midlands and Wales but the rest of the United Kingdom. That is another reason why it is important to ensure that the company survives.
For all those reasons, we must be very careful about the signals that we send out from the House tonight. The signals that we should send out, not only to the Community but to the EC Commission, are positive signals, showing that we believe in this proposition. If we give the opposite signal, the result will be merely a return to the uncertainty of which I have spoken, and which I cannot believe that any hon. Member wishes to see again.

Mr. Matthew Taylor: It came as something of a surprise, although a welcome one, to be congratulated by the Minister on the quality of our amendment—not least because he rather ignored some of the important points in it. He failed to explain why no alternative bidders were considered, and why the deal is being done on what Lord Bruce-Gardyne has described as "golden giveaway terms".
I desperately hope that, if the deal goes through, it is a success. There is no question about that. There is no point in hoping for failure from the Government's decisions. Having said that, there must be serious worries about whether it will do so and whether the Government have given the company the best possible chance of continuing the success which has been built up by the work force,

management, and the suppliers, who have also put in hard work and sacrificed in order to achieve the turnaround that the company has itself achieved.
I agree with the Government that one of the things from which this industry has suffered, not just since Rover and its predecessors were rescued, but way before that, was Government neglect, and especially Government interference. However, one of the problems with this deal, and the basis on which it is launched, is that it shows every sign of being another Government political manoeuvre and not one of industrial logic within the industry. The Government are not looking at the needs of the Rover Group as a car manufacturer and as an industry.
The Government say that this deal is all about taking the car industry out of politics. However, the nature of the agreement which we embarked upon is essentially a political one. It is one of ideology, with the Government trying to make their own political escape from a prison which they built themselves by their commitment. The Government made it clear that their intention was to privatise the Rover Group before the next election. It was a commitment that they were unlikely to want to go back on. However, as has been made equally clear by those involved in the industry, and by the comments of the Secretary of State, there was no chance at all of a successful flotation of the Rover Group as an independent entity before the next general election. They ruled out any possibility of that.
Those involved have said that, at the very least, four to five years' profits would he needed to establish the profit record of the company were it to be successfully floated, and that takes us beyond the next general election. Therefore, the Government, whatever they might have said previously, cannot ever have had any intention of a flotation. Equally, they were not prepared to take the political flak from a sale to a foreign bidder. Thank goodness for that. That was their motive, because they had discussed it previously with Ford, but had been forced out of agreeing to that purchase by the political flak that they had run into. They could not take that option, so they had to find a British buyer if they were to stand by their commitment.
It is no wonder that, when BAe came along, the Government threw up their arms in joy, rolled over onto their back and let BAe tickle them into giving it those golden giveaway terms. That is why the Financial Times editorial on 30 March said:
the real objection to the proposal continues to be that the bases on which the Government has chosen to negotiate appear more designed to save political face than to protect the taxpayers' interest.
That was the starting point of the entire problem. That is the first anxiety that we must address. The Government have not embarked on this matter as they claim to have done. However, perhaps they could have come up with a successful deal. It was an unusual route, but they could have come up with a deal that gives security to integrated motor manufacturing in this country, security that will ensure the success of the Rover Group.
The giveaway terms of the deal with BAe have nothing to do with industrial logic. That is not why BAe is happy about this deal. It is not synergy, but the commercial money gain that the Government are giving them. It is "monergy", not synergy, that this deal is all about. That is why BAe is so happy with the deal. I have no doubt that BAe has the best of intentions for the group. I have no


doubt that it will do what it can to see that the Rover Group is a success. However, that is not why it feels that it has a good deal. It is not that it feels that it has gained the synergy in industrial logic. It is because it has made a guaranteed commercial gain. It cannot lose.
The elements of the deal clearly spell that out. BAe is to pay £150 million for 99·9 per cent. of Rover, while the Government give Rover's debtors £800 million in cash. Thus, £1·1 billion of Rover's tax losses will effectively be eliminated. The remaining £500 million is to be set against Rover's profits—of course, not against those of the rest of BAe. Finally, the Government eliminate for themselves their guarantee through the Varley-Marshall-Joseph parliamentary assurances on the £1·6 billion of Rover debts. That is why Lord Bruce-Gardyne described the proposal as being on "golden giveaway terms".
One only has to go back a couple of years to the debate on the possible sale of Land Rover to General Motors to see that it is a golden giveaway. At that stage, Land Rover by itself was valued at £250 million. Therefore, somewhere along the line the taxpayer appears to have made a loss. One can see that reflected in the value of 2·7p that the Government have put on the shares of the Rover Group. The hon. Member for Beverley (Mr. Cran) said that the shares were priced at market value. Of course, that is the value that the market chooses to put on them. However, he also said that they had been worth nothing previously. I have looked at the history of these shares and I cannot find a time when they went down to 2·7p. They have not reached that level since the introduction of the investment programme or during the 1980s. They have been down to 15p, or 12p, but that is several times the value that the Government are prepared to put on the shares at present.
If BAe cannot lose, and if the Government feel that it cannot lose, it appears to he always at the expense of the taxpayer. However, will it be to the advantage of either Rover or British Aerospace? Again, the evidence casts doubt on that. I hope that it will be to their advantage. However, the evidence does not support the idea that this deal, in terms of the industrial success of those two companies, is giving anything like guarantees or even the best possible launch for the companies.
Again, the Financial Times editorial of 30 March 1988 rightly said:
Past experience, especially in the British motor industry, suggests that putting together two sets of problems can simply create a new problem even greater than the sum of the problematic parts.
Considering the difficulties that both companies face, because of the nature of the industries in which they work, one has to say that that appears to be true. Against the background of the history of the British motor industry, it appears even more true. One has only to go back to the much-heralded merger between BMC and Leyland to see that all that happened was successful Leyland was brought down by transfers of cash to ailing BMC. That is a past example of Government interference causing problems. That was the Government acting for political reasons rather than on the industrial logic of the companies concerned.
By combining these different companies, we potentially jeopardise both of them. We do not know which way the scales will fall, but the likely benefits are minimal. Aircraft manufacture is based on high-cost, low-volume production, with design engineering coming to the fore, whereas car manufacture is high-volume vehicle manufacture, with

high sales and production engineering. Aerospace products are marketed on the basis of long-drawn-cut negotiations, often between Governments—certainly with few potential customers—while vehicles are sold continuously. In other words, vehicles are sold direct to the consumer with a mass-marketing campaign.
Of course, BAe was originally interested in Land Rover. Perhaps Rover Group sales are more like those that British Aerospace is involved in. We know, from what Graham Day has said, that he wants to take Land Rover out of the mass market, away from competing with the Japanese, and into military, governmental and similar markets.
There is no guarantee whatsoever that after five years assets will not be stripped or that the company will not be sold as a whole to a foreign bidder. In the meantime, there is nothing in what the Government have said to stop a distress sale. I cannot believe that, if the joint company gets into difficulties, the Government will say, "If you save yourself, we want the benefits of your saving yourself and to put you back into the difficulties that you were in before you sold off the Rover Group."
The truth is that, if the company gets into difficulties and feels that the best way out of them is to sell the Rover Group, there is absolutely nothing that the Government—or any Government in those circumstances—can do to stop it. Different Governments might take different attitudes to what happens on the Rover side of things, but surely they will not demand that the company goes under just for the sake of honouring agreements made now. 'The truth is that the guarantees are not worth the paper they are written on.
Why BAe of all companies? The Government have still not told us whether another suitable bidder emerged after the original approaches from BAe were announced in the House. We know that there were four bidders arid that some were from other car manufacturers, probably foreign, but we do not know whether any British-owned company was in the bidding or whether any non-manufacturing company was in the running. We also know that, in saying what it would do with the company, BAe has not come up with any new marketing ideas or any dramatic change of direction. It has not come up with a phenomenal plan to change everything that has been happening, turn the company round, or massively increase productivity.
All that BAe has said is that it will follow the same corporate strategy that the Rover Group already has in place. This takeover adds only a political gain for the Government, not the chance of industrial benefit for the Rover Group. Confident that the EC will accept the proposals, the Government will not tell us what will happen if the company really runs into difficulties or what their view will be. If the EC throws out the proposal, will the Government just wash their hands and let the whole thing fall? That is why we are worried about it.
The Government are very fly with the figures about taxpayers' benefits, but their claim that, for an injection of £800 million—less the £150 million that BAe is paying—the Varley-Marshall-Joseph guarantees of £1·6 billion are being wiped out ignores the simple fact that the guarantees will be called in only if the Rover Group goes under; and the Government seem convinced that it will not. Moreover, if it did, assets would be realised which would have largely compensated for that, if the Government had


not already chosen to sell it off to some other car manufacturer. So the Government's claims that the taxpayer has been compensated look weak.
The Government are inclined to paint this issue entirely in terms of those who are for nationalisation and those who are for privatisation. Too much of this and the previous debate have focused on that. Hon. Members should turn their minds to whether there will be an industrial long-term benefit from this particular sale, carried out in this particular way, at this great cost to taxpayers in terms of their previous investments.
Of the motions and amendments on the Order Paper, ours is the only one to consider the issue in this light. The Government's answers give us no confidence. If the deal goes ahead, I give my best wishes to all those involved—the work force, the management and the suppliers—but my confidence in their success is certainly no greater than it was before, when the company was state-run; in many respects it is less. Given that the House is unlikely to vote on our amendment tonight, I shall support the Labour motion—not for what it says about state industries, but because the self-congratulatory attitudes of the Government inspire no confidence that they have any real idea of the needs of the Rover Group or British Aerospace. That issue should be addressed by the House and by the Government.

Several Hon. Members: rose—

Mr. Deputy Speaker (Mr. Harold Walker): Order. I see six hon. Members seeking to catch my eye. This is a short debate and, unless speeches are shorter, some hon. Members will be disappointed.

Mr. Hal Miller: I shall do my best to be brief, Mr. Deputy Speaker. I cannot say that we were surprised to hear that the Liberal Members would support the Opposition. The hon. Member for Truro (Mr. Taylor) addressed all his remarks to the Opposition. The only surprise is that he has declared so early which side of the leadership battle in his party he is on. He is obviously not after replacing the Labour party.
The hon. Member for Truro appears to misunderstand—perhaps deliberately, but perhaps by innocence—the fact that it has been the declared policy of the Rover board since the last election—not since Mr. Day, but going right back—that the company should be returned to the private sector as soon as possible. Therefore, this is no great Government machination, no great political intrigue and no great wedding to ideology. It is, in fact, freeing the company to pursue what the company's own board wants. The hon. Member for Dagenham (Mr. Gould) made absolutely no attempt to deal with that point, nor did he say what he would do if, by some mistake, his party should have to deal with the problem. How would he tackle the company's board? Obviously he would fly in its face.
I learned of this debate with some expectation. After all, the Opposition have made such a salad of the original statement that we had to have a debate four weeks after that. They lost the argument on that occasion, so I thought that this afternoon we would get something new.
I parted company with my right hon. and learned Friend the Chancellor of the Duchy of Lancaster when he

said that nothing has happened since the last debate on this issue. Well, I have some good news for him. Lots of things have happened. There has been an announcement of another 1,500 jobs at Longbridge on the R8. Sales for the first five months of this year are 6,000 ahead of any previous figure. The 800 fastback has been launched. Land Rover and Range Rover report record sales for May. In the case of Land Rover, they are the best for 11 years. Exports are the best ever. The build increased by nearly 200—that is quite an astonishing record. Production has increased on the Sherpa vans and there are plans for further increases. Exports of that vehicle have again increased. A lot has been happening.

Mr. Terry Davis: rose—

Mr. Miller: I am sorry, I shall not give way because time is short. I am sure that the hon. Gentleman will forgive me.
My right hon. and learned Friend appears to have overlooked the fact that a leadership election is developing in the Labour party. Perhaps that has something to do both with the recurrence of this motion and the attitude taken by the hon. Member for Dagenham. Did we get any glasnost or perestroika? Not at all—it was back to the hard line. I noted that the hon. Member for Dagenham carefully said that there is no case for changing the present ownership. There was no mention of social ownership. The hon. Gentleman has been hauled back into line for the politics of the internal Labour party elections.
I half expected to hear that wonderful chatterer the hon. Member for Great Grimsby (Mr. Mitchell) talking on the water as he crossed the Humber to offer his support to the hon. Member for Kingston upon Hull, East (Mr. Prescott) in those elections about bringing him a successful debate on the Rover sale. Dearie me—if it were not so serious, it would be quite a comedy. I was almost anticipating "The Two Ronnies". Perhaps we would have had the revelation that Mr. Ron Todd would offer Rover the Dundee electronics plant, without commitment, as an earnest of commitment to the success of the motor industry in this country and to the updated, high-value, high-technology industry in which Opposition Members keep asking us to invest. The Opposition have not spoken about how they destroyed that investment. But, I thought, perhaps there is time for repentance. Perhaps we could have heard from the other Ronnie, the hon. Member for Edinburgh, Leith (Mr. Brown). Incidentally, I never thought of the showers in the House of Commons as sin bins. Perhaps he had intended to offer to place orders from Afghanistan for Sherpa vans or Land Rovers for Libya to reconquer Chad. I had hoped for great things from this debate.

Mr. Roy Hughes: On a point of order, Mr. Deputy Speaker. The hon. Member for Bromsgrove (Mr. Miller) is the joint chairman of the all-party motor industry group. I believe that his contribution to this debate is simply a disgrace and certainly out of order.

Mr. Deputy Speaker: I do not believe that I can rule the speech of the hon. Member for Bromsgrove (Mr. Miller) out of order, but I hope that he will have regard to what has been said and the fact that other hon. Members are seeking to speak in the debate.

Mr. Miller: I promise to be brief, Mr. Deputy Speaker. I was discussing public ownership, which is one of the main planks in the Opposition's motion.
The Opposition have also talked about a give-away, but I believe that they have given away what is going on in the Labour party and the reason for this debate. It is nonsense for the Opposition to complain about Government support for the company and at the same time to complain that the Government are not giving enough support to the company. The Opposition must make up their minds as to which way they want to go.
Finally, heeding your advice, Mr. Deputy Speaker, I wish to discuss investment. We heard the hon. Member for Dagenham—the so-called "new wave" of the Labour party—go back to talking about throwing money at the problem. The hon. Gentleman ignored the fact that the Rover Group plan, with its investment connotations, had been accepted by British Aerospace—a point made in the powerful speech of my hon. Friend the Member for Beverley (M r. Cran).
The hon. Member for Dagenham appeared to go hack to the days of the Ryder plan and spoke about a volume car producer, ignoring the fact that currently, unfortunately, Rover is not a volume car producer. His solution offered no prospect of the company becoming such a producer.
The hon. Member for Dagenham, never mind ignoring the lessons of the Ryder plan, suggested that a lot more investment and technology would produce results. On the last occasion that we discussed this matter, I said that there had been too great a reliance upon a strategy for technology. In that context I mentioned Professor Battachatiya, who is one of the most plausible and persuasive advocates of such a policy. He offers a technological short-cut for dealing with the problems of Rover. I am afraid that that spirit is still alive and well despite the Japanese experience. In our last debate I quoted the experience of Toyota. This week I made inquiries in Japan about Honda. That company is extremely concerned at the line that has been taken by Professor Battachatiya and his reliance on technology rather than dealing with the problems of leading, managing and co-operating with the work force. I am sure that Labour Members would agree that they are the most important ingredients for the success of a company.
I found the Opposition's case most disappointing. There was no advance, but a retreat from the glimpses of the change we have had. That is why they are the real conservative party because they are unable to meet the challenge of change. They have retreated from any suggestion of perestroika or glasnost. I am afraid that we have nothing to look forward to from the Labour party and nor has the work force. The Labour and Liberal parties expressly keep on referring to the problems. They have done everything to undermine confidence in and run down the achievements and potential of two fine British companies.

Mr. Terry Davis: I shall not respond to the speech of the hon. Member for Bromsgrove (Mr. Miller), who, for most of the time, indulged in a knockabout speech that dealt with personalities and made partisan points that had nothing to do with the debate. I do not intend to demean myself by following him into that gutter.
I wish to refer to the speech of the hon. Member for Beverley (Mr. Cran), which was based on his experience in

the west midlands and concentrated upon the issue facing the House tonight, the gift of the Rover Group to British Aerospace. The hon. Gentleman is absolutely right to express concern about the effect of the present uncertainty on the prospects for the Rover Group. He was right to draw attention to the effects of that uncertainty on sales. If it continues, those sales will be greatly affected. The hon. Gentleman is wrong, however, to say that this debate is responsible for that uncertainty. This debate is the result of the Government's proposals.
The hon. Gentleman was right to say that we should let Rover Group get on with the job. I agree with him that we should leave it alone and not disturb it, and in one way I agree with him that we should not be having this debate tonight. We are having the debate only because the Government have destabilised the position. It is the Government's proposals that we are debating. They have introduced uncertainty by wanting to give Rover Group to British Aerospace. The hon. Gentleman must place the blame where it rests—on the Government.
The hon. Gentleman resented the debate for another reason—because we should not debate the future of the motor industry in general, or Rover Group in particular. I disagree with him on that point. He said that the debate should take place in the board room. We think that it should take place in public, not behind closed doors, because we are debating the future employment of thousands of people and the means of living of thousands of families. Therefore, the debate should take place in public where the public and those who work in the industry can make up their minds on the arguments expressed. I disagree with the hon. Gentleman's wish, which is shared by the Minister, to keep this private.
The Minister seemed to be equivocal and ambiguous about whether the past investment of £2·9 billion by Governments of both parties was good or bad. He seemed to regret it. I do not. That investment has saved Rover Group. Without it we would not be having this debate and the Government would not be giving Rover Group to British Aerospace. There would not have been a Rover Group. In fact, it would have gone out of existence 14 years ago if the Conservative party had had its way because it opposed the rescue, perhaps for the reason that the hon. Member for Beverley adduced—that it is for the Opposition to oppose. We would not have had this debate, a Rover Group or a British motor industry to debate, either in private or in public on that basis.
There are two crucial issues. The first relates to the strategy which is appropriate to the Rover Group. The Minister seemed to think that the Social and Liberal Democratic party agreed with him on that, but I am not sure. When I read the terms of its amendment I thought that it did, but the hon. Member for Truro (Mr. Taylor), did not agree with the Government. The Minister made the Government's position clear. They want the Rover Group to have higher profits as a result of lower sales of high value cars. They want lower volume sales.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins): No.

Mr. Davis: The Minister says no. I am afraid that there is another division among the Government, but I shall not pursue that.
We on the Labour Benches are united in saying that, we want a Rover Group with the ambition, objective and


target of higher sales. We want it to return to being a volume car manufacturer with higher sales and higher volume and more jobs. That is the crucial point.
The argument is not about whether the motor industry and Rover Group should be profitable. It is about how those profits should be earned, whether from low volume sales of high value cars or from high volume sales of cars which generate, not only high profits but more jobs. We are fearful that the Rover Group's strategy will lead to fewer jobs for our constituents, albeit with higher profits. We want higher profits from higher sales, so more jobs. When the Minister talks about going up-market he only confirms our suspicion that he is going up-market for cars and customers but down-market for jobs for our constituents.
The second crucial issue is whether Rover Group should remain in public ownership or be sold. During the previous debate we went into the terms of sale in detail. The hon. Member for Beverley did not seem to be aware of that, but we discussed the terms of the proposed sale, or the gift as we see it, in great detail. This debate has concentrated rightly on whether the Rover Group should remain in public ownership or be given away. We are clear that it should continue in public ownership. The Minister said that we had an ideological obsession with nationalisation. However, at the centre of the debate is the Government's ideological obsession with private ownership. I have not heard any justification for the Government's belief that in some way private ownership would be beneficial for this section of the motor industry which failed before under private ownership. The only reason that it was taken into public ownership was to rescue it and to allow it to survive. The Government provided the investment which was needed to save jobs.

Mr. Eastham: Does my hon. Friend recall that only a few years ago there was a serious failure in engineering at Rolls-Royce and that the Conservative Government decided in a matter of days to nationalise Rolls-Royce, otherwise there would have been no industry?

Mr. Davis: My hon. Friend is correct. I was a Member at the time and we supported the Government. I regret that only a few months afterwards the Conservative party, hell-bent on opposition, decided to vote against the salvation of the Rover Group. Tonight we see the result of that change in the Conservative approach. We are debating the ideological obsession of the Conservatives and their doctrinaire, dogmatic hostility to public ownership. They are politically hostile to the public ownership of the Rover Group precisely because it is successful.
One of the few constructive parts of the speech of the hon. Member for Bromsgrove was his reference to the recent good news from the Rover Group. Of course, that was good news from the Rover Group in public ownership. Let it be said that the 1,500 extra jobs at Longbridge are being provided by a publicly owned company. Such good news will not continue in future.
The Minister referred also to the success of Jaguar in recent years. That company is successful, again because it was saved by a Labour Government. It, too, would have closed 14 years ago—[Interruption]. In an intervention from a sedentary position the Minister has said that it was

saved from Geoffrey Robinson. That is rubbish. Geoffrey Robinson was the managing director of Jaguar for a time and he helped to save the company. I give credit to him, just as I give credit to John Egan and other people who played their part, and I am sorry that the Minister chooses to make that petty, spiteful comment from a sedentary position; it demeans the Dispatch Box.
One reason why Jaguar has been more successful in recent years is that Geoffrey Robinson, among others, helped to lay the foundation of better quality cars. There was also a drastic change in the exchange rate. I am referring not to recent changes but to the decline in the pound against the dollar. That is the real secret of the success of Jaguar. It did not have anything to do with private ownership. Jaguar was successful under public ownership in the same way as the Rover Group has been successful under public ownership. The success has been the result of 14 years of hard work and investment by the taxpayer. The Government resent the success precisely because it has happened under public ownership.
My hon. Friend the Member for Dagenham (Mr. Gould) was unnecessarily kind to the Minister when he said that the future was guaranteed for five years for people who work in the Rover Group. That is not correct. The Government have had a guarantee that the Rover Group will not be sold by British Aerospace within five years without the money being returned to the Government. That is not the same as saying that the jobs are guaranteed for five years.
I listened carefully to the hon. Member for Beverley. He said that the chairman, Graham Day, had given a guarantee to the Select Committee on Trade and Industry that the jobs would be guaranteed insofar as they could be. We understand the exigencies of the market place but the hon. Gentleman told us that British Aerospace has said that there are no plans to declare redundancies. We will put that guarantee in the bank. I hope, for the sake of my constituents, that I do not have to take it out and show it to the hon. Member for Beverley within the next five years. My information is that British Aerospace will declare redundancies in the Rover Group in the same way as that company has declared not once but several times, not hundreds but thousands of redundancies, not only among AEU members, to whom my hon. Friend the Member for Manchester, Blackley (Mr. Eastham) referred, but among all levels of staff and employees at British Aerospace. As a result of so-called rationalisation there will almost certainly be redundancies at the Rover Group under British Aerospace.
The Minister gave the game away when he said that the Government were taking this opportunity to return the Rover Group to the private sector because of the general well-being of the economy "at the moment". He said that it was propitious to return the group to the private sector "at the moment". What happens when the moment passes and the economy runs into difficulties? What happens when it becomes more difficult to sell cars abroad because of the exchange rate? By that time the Government will be able to avoid any responsibility for redundancies or for the future of the Rover Group.
The group should remain in British public ownership. It is important for the future livelihood of my constituents and for the livelihood of thousands of people in the west midlands who depend not only on the Rover Group but on its suppliers and dealers. It is vital that that heart of the motor industry remains in existence. If it does not, other


jobs will be lost. The only way in which we can give a guarantee to the people who work in the Rover Group and to the people who depend on it is to say that the group will survive. The only way it can survive is by being kept in public ownership and that is the alternative the hon. Member for Beverley asked for.

Mr. Roger King: The hon. Member for Birmingham, Hodge Hill (Mr. Davis) and many other Opposition Members have said that the Rover Group should remain in state ownership because it is only state ownership that has saved our car industry. We shall never know that because if instead of being brought into state or public ownership 14 years ago it had been allowed to go into liquidation it is highly possible that today we would have a motor industry of greater volume than we have at the moment.
The history of the British motor industry is of companies going out of business or being taken over by other businesses. Daimler, Singer, Standard and Wolseley come immediately to mind. They fell on hard times and went bankrupt. People picked up the pieces and made a success of them, but then they faded from the industrial scene as they were merged into bigger companies. We shall never know whether state ownership could have saved the car industry. However, we do know that, as a result of state ownership, our motor industry is nothing like as big as it was. It has been reduced and it is only by separating the units and by privatising companies such as Jaguar that future success and prosperity can be guaranteed. There are now more people working for Jaguar than worked for it when it was state-owned and included companies such as Alvis and Self-Changing Gears. Jaguar is successful and it has maintained that success and built on it because it knows that if it does not succeed it will go out of business and there will be nobody to provide a blank cheque.
The Rover Group wants to be privatised to get out from underneath the state company. I know that because I live among the work force, as does my hon. Friend the Member for Bromsgrove (Mr. Miller). We live and work among the people of Birmingham and we know that they are sick and tired of being the subject of public debate year in and year out. They are subjected to that by the Opposition who are anxious to point the finger and say that Rover is a failing company. They try to run it down and to do a hatchet job on it, and that is what they have been trying to do in this debate.
The Opposition talk about the survival of the business, say that it cannot provide the investment and that it will go out of business. They are saying that at a time when the group is fighting for all the sales and registrations that it can get in August. The Opposition are anxious to convey the message to the public not to buy Rover cars because they can have no faith or confidence in the company and that it will go out of business as a result of what the company—not the Government—wants to do. It is not the Government who are seeking to privatise the business. The managing director and the chief executive of Rover and British Aerospace got together and said that they have some degree of rapport because they are both in highly technical engineering.
Britain has many companies making all kinds of things and with all sorts of subsidiaries. Vickers is a classic case. It makes Rolls-Royce cars and lithographic plates. There

is no direct synergy between the companies but the same disciplines, corporate investment, opportunities and facilities are at head office for use by all the subsidiary companies. I am confident that under the new arrangement the Rover Group in partnership with British Aerospace will prosper.
Of course there is a cost element involved, but there is absolutely no doubt that the Rover Group could maintain its present financial position as a state company. Somewhere along the line the debts have to be written off and the Government have to restructure the company financially. By assisting in its restructuring and allowing it to go into the private sector, they are getting a remarkably good deal for the country and for the company.
The hon. Member for Dagenham (Mr. Gould), who represents a Ford constituency, made great play about lack of investment in the Rover Group if it goes into private hands. He said that it will be knocked apart by exhaust emission controls and has no hope of being able to surmount that. That is an insult to the engineers and to the company. Of course it can surmount that. New engines and new cars are on the way. It already has new engines running, and of course it sells cars to the United States of America where exhaust emissions are of paramount importance.
It is a fallacious argument and a wicked one to boot. It says that if Rover fails we shall become a branch line in engineering. Obviously, the hon. Member has no idea at all about engineering in the motor industry today, because Rover Group is in partnership with Honda in gearbox assembly and the use of engines. It is in partnership with Volkswagen over gearboxes and it will soon be in partnership with PSA/Peugot-Citroen for the manufacture of gearboxes. That is the name of the game in the British motor industry and in the world car industry. For years the Rover Group has been buying automatic gearboxes from General Motors, and from Chrysler before then, for certain up-market cars. That is the name of the game. It is not branch-line engineering; it is making the best use of the available products in the market place and that is as it should be.
I have spoken to the work force and I know that the workers look forward to the new arrangement because it solves the problem that they know the company has to address. Will it find its future in the state sector where it becomes a subject of public debate and abuse, or can it get into the private sector, free from the shackles of Government controls, constraints, debates and interference and be allowed to prosper on its own? Having spoken to many of the employees in Birmingham, and I am sure that the same could be said for those in Cowley, I have absolutely no doubt that they know that their future lies in the private sector and they have but one thing to say to the Labour Opposition, and to those who insist on debating the future of the company, and that is, "Lay off it."

Mr. John Hughes: I have listened to many speeches tonight, and I have little affinity with them, especially with those of the Bernard Mannings on the Conservative Benches who treat this very important subject and people's jobs in a jocular manner.
I have listened to the statisticians in the debate. That was an unexpected ploy from the Government Benches, but it bears little resemblance to the physical realities of


people. The British people know that Rolls-Royce, British Telecom, BP, British Gas—and Rover, if it happens—have been stolen from them. They have lost out in those deals in an inhumane way. The revenue from those companies which originally went to the Treasury bought hip joints for the elderly, provided dialysis machines for renal cases, provided wheelchairs for the disabled and operations for cardiac patients in the Birmingham children's hospital. That is what the revenue from British Leyland meant, and you ignore that.

Mr. Speaker: Order—not me.

Mr. Hughes: It would have continued to meet that very humane need but for the obscene greed of the Government which has diverted revenue from humane needs into the well-lined pockets of the shareholders. In the case of Jaguar, 50 per cent. of the shareholders are American.
Anyone who has been employed in the car industry must view the Government's latest proposals with deep apprehension. They have suffered horrendously from the Government's strategies. Government appointees—so-called experts—had a brief to make Leyland as competitive as the Japanese manufacturers. The product of their pruning and slashing is the equivalent of a Japanese bonsai tree. It is stunted and fragmented. Indeed, the industry is so small that only the sweat and skill of the workers have prevented it from going to the wall.
I have experienced the effects of these industrial entrepreuneurs. Morris Engines, where I worked, provided homes, and clothed and fed families. It was reduced to rubble by Government appointees. Coventry car manufacturers, who were of world repute, were wiped off the map. Coventry was blighted, and it has yet to recover. That is what threatens workers who will be affected by these proposals.
I can only hope that the European Commission will not permit the merger. If the deal is permitted, I can only say that, if it were made outside the House, it would put the perpetrators in gaol. It is the result of connivance by a Government who lack humanity and refuse to fund the Birmingham children's hospital adequately. They are prepared to jeopardise the lives of children who suffer from major cardiac complaints. You should be standing up and talking about the child who has died in your constituency because you have argued for revenue—

Mr. Speaker: Order. I remind the hon. Gentleman that he must put his speech in the third person.

Mr. Hughes: Revenue from the company will be handed over dishonestly to shareholders. It will line the pockets of shareholders of British Aerospace if the privatisation goes ahead.

Mr. Robert Hayward: I represent a primarily British Aerospace constituency, but I was astonished by what the hon. Member for Dagenham (Mr. Gould) said. I have listened to him in Committee for many hours, and it was unfortunate that his speech tonight in no way matched speeches that I have heard him make on many other occasions.
I have rarely listened to so much criticism, complaint and denigration of the prospects for British industry.

Everything that has gone wrong he blamed on the Government and on private industry; everything that has gone right has been claimed as a success either of public financing or of a change in the exchange rate. I find that amazing. The hon. Gentleman made not one reference to the achievements of the Rover Group or of British Aerospace. All we heard about was failure, failure, failure.
I was fascinated, but not surprised of course, to hear no reference to the debate on 11 March 1987 about Leyland—DAF and the general state of what was then the Austin Rover Group. It was all doom, gloom and despondency. We were told that Leyland Trucks would disappear. What has happened? The latest figures show that Leyland Trucks' sales have increased because it has had access to the dealer network throughout Europe provided by DAF. That is precisely what Conservative Members said 15 months ago, especially my hon. Friend the Under-Secretary of State for Industry, who was then on the Back Benches. We heard constant carping about the state of British Aerospace and its capacity to cope with the intake of a major motor manufacturer. British Aerospace faces difficulties with airframe manufacture and the exchange rate is causing further difficulties. Opposition Members fail to recognise that two years ago the exchange rate, instead of being £3·10p to the deutschmark, was £4 to the deutschmark. It has increased and decreased, and somebody must say whether that benefits the aerospace and motor industries.
Rationalisation in the aerospace and motor industries has cost jobs. It has not cost 1,100 redundancies at Filton, as the hon. Member for Coventry, South-East (Mr. Nellist) suggested. I should know because I represent the area; he does not.
We are debating the proposed merger between British Aerospace and the Rover Group. Significantly, we have not heard one serious alternative proposal from the Opposition. The hon. Member for Dagenham referred over and over again to an indigenous motor manufacturer. Is it indigenous with a link with Honda? If it is to be purely indigenous, would the hon. Gentleman drop the link with Honda or would he extend it and allow it to operate?
If the Opposition are saying that the merger with British Aerospace should not go ahead, they must say what they would do with the Rover Group. I was surprised that, in denigrating the two companies, no Opposition Member referred to the massive funding given to Renault. The hon. Member for Coventry, South-East suggested that the European Community should refuse to allow the merger to take place. What is the alternative? Is it merely to pour in more money? The amount involved in the merger is insignificant compared to the amount given to Renault. The deal is good for both companies, and it is about time that the matter was resolved, cleared off the decks and both companies became one.

Mr. Andrew Smith: The hon. Member for Kingswood (Mr. Hayward) needs to learn the important difference between a link and complete absorption. The Labour party recognises and values more than anyone else the importance of the link with Honda. If British Aerospace had something to add, and it may have something to add, there would be no reason why a link should not be established. Complete takeover is a different matter.
The takeover is clearly motivated by the Government's pathological hatred of the public sector and, I suspect, by the fact that they will not recognise the importance of the public-sector contribution to the many achievements that the Minister rightly mentioned earlier.
The critical question for the future is from where the capital will come. It is no good saying that undertakings have been given, that money may be available from British Aerospace or that the takeover will depend simply on the market. What we are being offered depends not only on the car market—to which the Rover Group's work force and all the other companies involved have been gearing their efforts—but on the aviation market, which is very uncertain. We have not been given any guarantees that capital investment will be made available in the future, which is the major worry that the workers at Cowley have expressed to me in recent months. I agree wholeheartedly with one comment that was made by the hon. Member for Bromsgrove (Mr. Miller). He said that a lesson that must be learnt from the Japanese is how to co-operate with and motivate the work force.
The best signal that could he given to the public and Rover Group's work force—especially at Cowley, where my constituency responsibility lies—is an announcement about the forthcoming model range. The lack of a new model for Cowley is of major concern. I shall not rest until I have been given undertakings that the future of the work force will he secured.
A question has to be put to the Government. If the deal goes ahead and they have shrugged off their responsibility and washed their hands of this vital strategic industry, what happens if it goes wrong?

Mr. Austin Mitchell: This debate has been a fascinating exercise; it has made me realise that, having failed the viva we gave the Government on 4 May, all the opportunities for revision, all the hard work done by Central Office and all the advice of the Civil Service have not produced in tonight's re-examination any better arguments than they had before. Essentially, the Government's only argument throughout the debate, which has been echoed by every Conservative Member who has spoken, is, private good, public bad; private good, public bad. They have chanted that like Orwell's pigs as if it was the key to economic regeneration.
It has been a sad spectacle watching hon. Members whose constituencies are affected by the exercise having to whistle in the wind because they do not have the guts to speak up for jobs, the integrity of the industry, investment or the new models and because they do not have the intelligence to see what is happening to the industry and what is implicit in the deal. All they have been able to do is reiterate the chant. Greater love hath no man than that he lay down his constituency and his industry for his leader's prejudices. It certainly helps in that process if one does not understand what is going on. We shall see the consequences of that.
As our motion states, no good will come of the merger. It has no logic. It helps neither company and contains the danger that it could harm both. That is a real probability. The Government, with no higher wisdom than to get rid of public assets—the Lady Macbeth syndrome: "Out,

damned spot", or "Out, damned Rover"—are washing their hands of their responsibilities in an attempt to get rid of Rover at this opportunity.
Every country faced with a crisis in its car industry has seen the centrality of that industry to manufacturing, the balance of payments, employment and technology in that country. It does not involve just electronics but ceramics and plastics. Every country has intervened to save its threatened car industry. Even in the United States, the Government intervened to save Chrysler. That is the Government's responsibility. That has happened in this country too. Several countries are still supporting their car industries generously—Spain, France and Italy and, to a limited extent, West Germany.
The important point is not the endless argument between privatisation and nationalisation but the support necessary to build the industry up into a state in which it could survive on its own feet if it was Government policy that it should do so. The strength of the industry is the crucial factor, not the doctrinaire arguments about public or private ownership.
Rover cannot stand on its own two feet as an independent producer. It is still trapped in its central dilemma. It is too small to be a volume car producer, but it is not yet sufficiently well invested to be the quality up-market producer we would like it to be. A production total of just over 400,000 a year is not adequate to generate the investment or the new models. It is not a firm enough base to generate the profits that would allow the company to survive.
A previous top executive of Rover, Ray Horrocks, said in 1986 that to survive and to generate profits sufficient to make the investment self-sustaining Rover needed an output of 600,000 vehicles a year: in other words, a third higher than the present output. That is what it needs to survive. The Government's responsibility is to keep supporting and helping Rover and to keep it in the state stable until it achieves that figure. Then we can talk of its being viable. Then we can talk about returning it to the private sector, if that is the Government's doctrine. Until then, Rover cannot survive on its own. That is the crucial factor.
Ministers have not told us how a company that is now surviving and investing in new models only because it is in the state sector will manage on its own in the long term. Putting it into the stable with British Aerospace is effectively much the same as putting it out on its own. It needs a scale of production that it does not have. Until the company has that scale, the state has no alternative but to keep it. Endless questions have been asked about Labour's alternative. Our alternative is to keep Rover Group where it is, to build it up and invest in it and to produce the new models that will allow it to survive. That is the only sensible strategy, and that is the strategy we advocate.
The Government have prevaricated, chopped and changed and wombled and wandered all over the place alternating their policies. For a period, we have had the Graham Day treatment. If I am not well disposed to Graham Day, it is not only because he has dropped the name Austin. He has inflicted the anorexia nervosa treatment on Rover. He has constantly gone for profits and financial return rather than scale, investment and building up the company. That is the crucial thing. He has shed functions and services. He has shed Unipart, Bos, trucks, Llanelli Radiators, Beans Foundry and Leyland CVT—all functions that a car industry needs for


integrated production. They have all been chopped off one by one in the desire to pretty up the profits and get the company back into the private sector as quickly as possible to raise money. In other words, Rover Group has shed everything that it needs in its association with British Aerospace.
Now the Government have gone in for another zig-zag phase. A previous zig-zag was to flirt with sale to competitors. Frankly, that would have brought in more money for the taxpayer, if that is what the Minister thinks is important. A competitor would undoubtedly have spent more to run it down—

Mr. Joseph Ashton: Is it not the case that the Government would have preferred to sell on the open market—if necessary to the Japanese—but that the Secretary of State for Wales, who represents Worcester, and the Secretary of State for Employment, who represents Sutton Coldfield, knew the political consequences of selling to a car competitor from abroad and used the interim period to sell the company to British Aerospace so that that company can sell it in five years' time? No guarantee has been given to the Select Committee on Trade and Industry that that will not happen.

Mr. Mitchell: My hon. Friend is extremely well informed on these issues, from his work on the Select Committee. That scenario is quite likely. Perhaps the Government are postponing the evil day. They were rightly stopped from pursuing that strategy. They could not carry out the only test of a company's ability to survive: they could not float the company, because they knew it would sink. The genuine way of privatising the company is not to lean it on another company but to float it off as an independent company.
Why did the Government not do that? If the company is ripe for privatisation, why not keep it going until it has the necessary scale and then float it? They did not do that, but they were desperate to give it the Lady Macbeth treatment. I am reminded of a joke from "Beyond the Fringe": what we need at this stage of the war is a futile gesture. The Government have found the futile gesture. They can get rid of it. It is the wind of opportunity; something that fell off the back of the devaluation expansion from 1986—the improvement in the fortunes of the company.
The Government were in a dilemma. Enter at that moment—not with a "Shazam!"; not from Krypton but from Harrods—Captain Britain, that industrial Toby jug, Professor Smith, who is not, it has to be said, as daft as he looks. He wants a good price for taking the company off the Government's hands. He has nothing to offer. British Aerospace has nothing much to offer except casual conversations between engineers. There is no synergy. Frankly, there would be more synergy if Rover merged with the manufacturers of dangling dice for the back window or plastic car upholstery.
British Aerospace works on a long-term investment strategy and it takes 15 years for its investment runs to come home. To sustain it now it needs a cash cow, something like an insurance company or, perhaps, Harrods. Instead, it is being offered Rover because it is clear that, for the next two years, Rover will boost its earnings per share. Phillips and Drew estimate that

earnings per share will jump to 62p this year and 96p next year, as against 48p per share without the merger. It is all about giving British Aerospace survivability and the earnings that it cannot get from the cash cow that it should have had. All that British Aerospace has given in return is a guarantee that will last for only five years, with the possible consequences that my hon. Friend the Member for Dagenham (Mr. Gould) rightly mentioned. It is nothing more than a short-term measure.
As my hon. Friend asked, what happens if the European Commission deems that the Government's contribution to the merger is too great? The Select Committee asked Professor Smith whether it would affect his willingness to purchase if that contribution was cut. He said, "Quite dramatically." In other words, it will all be up for grabs again. That is the danger, and the Government have given no guarantee of what might happen then.
Both companies are vulnerable in the same way. They do not supplement each other; they simply amplify each other's weakness. Both are vulnerable to a rising exchange rate that is threatening British manufacturing once again. It does not matter which aspect of Government exchange rate policy we consider, whether it be the Prime Minister's or the Chancellor's—the one is only slightly dafter than the other—or a combination of those policies: the pound is now too high for the health of manufacturing. What is more, the Government are refusing to allow the free market, which they praise in every other respect, to operate on the pound. Why not let the free market operate on the pound, bring down interest rates and bring down the pound with that? Industry must bear the double burden of an over-valued pound supported by interest rates that are far too high.
Our real exchange rate against the deutschmark is up 16 per cent. on 1987 and up 40 per cent. on the last quarter of 1976. That is what will strangle British manufacturing industry. The Government cannot blame pay increases, because labour costs increased only slightly last year because of expansion. The Chancellor has discovered a secret—expand the economy and labour costs come down. Now, because production is falling, labour costs will increase again.
The terms of trade for manufacture now stand at 107, so they are worse than the 105 at which they stood in the first quarter of 1981. Everybody knows that the exchange rate then was disastrously high, with ruinous consequences for British industry. It is now worse. We are heading for a position in which both British Aerospace—especially its commercial planes and the Airbus contract—and Rover will be vulnerable. Our exports will be down and our imports up. Jaguar's exports to the United States are down 20 per cent. in the first quarter of this year, and the imported share of the British car market will increase to more than 50 per cent. this year. A repetition of the disaster of 1979–81 will result from over-valuation of the pound.
When both companies are weak in the same areas, they are not helped by being shackled together. They compound each other's problems. Whence will come the investment for new models? The Government have given no answer to that, yet new models are crucial if the company is to continue. All this has happened because the Government want a quick fix. There are no guarantees about redundancies, plants or new models. There is no provision for investment, and no provision for the future.
That is the economics of irresponsibility. The Government have betrayed the British car industry, which has seen a bigger rundown than has occurred in any other country since 1979. There has also been a bigger increase in imported cars than in any other country since 1979, and now Rover is about to be betrayed.
The danger is that a company in that situation will not survive but will have to be brought back into the state stable by a Labour Government as a central part of the expansion of manufacturing industry, because this Government, irresponsibly, made no provision for its future. That is the betrayal which a Labour Government will reverse.

The Parliamentary Under-Secretary of State for Industry (Mr. Robert Atkins): There have been four debates on this subject and at long last the hon. Member for Great Grimsby (Mr. Mitchell) has admitted that if—God forbid—the Labour party ever returns to government it will renationalise a privatised Rover Group. At last we have that on the record. We have been trying for some time to get that response and now we have it—and we shall not forget it.
It is inevitable that in the course of my remarks this evening I shall repeat myself, as on the three previous occasions—31 March, 4 May and 12 May—when the House considered this matter at considerable length all the points raised tonight by Opposition Members were discussed. Nothing has changed and we have nothing further to report in relation to progress in our discussions with the EC.
It is a measure of the lack of the Opposition's originality that they cannot find anything else to talk about except to repeat themselves. I was warned by the hon. Member for Coventry, South-East (Mr. Nellist), in one of his Adjournment debates, that the chairman of the parliamentary Labour party was pressurised by him into having a further debate on which the Opposition could vote. He told me so, and he speaks with some authority on motor industry matters, as he frequently reminds us. Therefore, the hon. Member for Dagenham (Mr. Gould) had to do what he was told. That is why we are where we are today.
I remind the House again of my constituency involvement with British Aerospace, Leyland-DAF and Leyland Bus with the town whose name was once given to the company we are discussing today. That involvement has enabled me to see—contrary to the jibes of some Opposition Members, to the effect that many of my hon. Friends and myself do not pay attention to those working in the industry—the logical development that is represented—

Mr. Gould: The Minister has nothing to say.

Mr. Atkins: Opposition Members have chosen today for their debate. They have spoken at length, and on the basis of a lack of information. The least that they can do is to listen to the Government's response—albeit for the fourth time—because they do not have anything original to talk about.
In the short time left to me, I remind the House that we discussed this matter at considerable length on the Floor of the House and in the Select Committee.

Mr. Gould: He has nothing new to say.

Mr. Atkins: The hon. Gentleman is right; we have nothing further to add to what was said in the previous debates which the Labour party initiated. We have reminded the Opposition yet again that that is the case. It is not my fault that I am here answering the debate—it is the fault of the Opposition, because they chose this day to repeat themselves ad nauseam.

Mr. Ashton: rose—

Mr. Atkins: No, I am not giving way. If the hon. Gentleman has something to say, he can write it up in his article for The Star and we shall all read it with great interest.

Mr. Ashton: rose—

Mr. Atkins: Go on, then.

Mr. Ashton: Is the Minister aware that the Select Committee on Trade and Industry has discussed the matter at length for many hours? It is apparent that the Government are stalling and refusing to reply to any debate until August because they do not want to respond to the Common Market point.

Mr. Atkins: I assure the House that my right hon. and learned Friend the Chancellor of the Duchy of Lancaster has told me that he will be on holiday in August, and I shall certainly be. I suspect that the hon. Gentleman will he as well. On that basis, nothing of such importance is likely to happen.
From my knowledge of my area and from talking to people working in the industry, particularly the component manufacturers and a number of the dealers who have written to us, I am satisfied that the deal will be extremely good news for my constituents, and those of many other hon. Members on both sides of the House. Having talked and listened to them, I know that they want to stay within a British company, and that is what British Aerospace is—a company that has dedicated and devoted itself to doing great things in the export as well as the domestic market. I believe that their interests, and those of constituents of other hon. Members, will be protected by a speedy implementation of the terms of this conditional agreement.
Do the Opposition really want to return to the days when Leyland was a music-hall joke, the butt of every cheapskate comedian'? Do they want to return to the days when morale was at rock bottom, and many employees—my constituents, working orginally for Leyland Motors and before that for Spurriers—resented the dreadful image created under their management? Do they not recognise the achievements of the present management in rebuilding the company in co-operation with the work force—a management that wants the company to be returned to the private sector? Need I quote Graham Day yet again'? His classic comment was:
For me it is not simply a matter of ideology, it is a matter of very good common business sense".
I want to draw particular attention to some of the speeches that have been made. My hon. Friend the Member for Beverley (Mr. Cran) made an excellent speech, as many hon. Members on both sides of the House will have recognised. He speaks as a knowledgeable former director of the CBI who understands industry. He is also a member of the Select Committee which, as he rightly said—as did the hon. Member for Bassetlaw (Mr. Ashton)—considered the matter. He is right in his assessment that


the continuous spotlight on the company is not necessarily doing it all the good that it should do. My hon. Friend the Member for Bromsgrove (Mr. Miller) speaks with considerable authority, because he knows what is going on—backed by my hon. Friend the Member for Solihull (Mr. Taylor), who is prevented from contributing to the debate but whose advice we find invaluable in the Department, and without whom we could not make the decisions that we make.
There were jibes from Opposition Members that my hon. Friend the Member for Birmingham, Northfield (Mr. King) has never made so much as a mousetrap. Yet he was an engineer working for the British Motor Corporation, and he has set up a company that supplies components to the motor industry. He knows what he is talking about, unlike Opposition Members, and the sooner they realise that the better.
That is the point. Conservative Members, speaking about constituencies where they live and understanding what the work force has to say, speak with authority. Opposition Members are in the desperate straits of old-fashioned Victorian Socialism. All that they believe in is nationalisation at all costs, and the hon. Member for Great Grimsby, that master mixer of metaphors, has given a commitment to renationalise the company if and when Labour ever come into office.
We have made it clear that we believe that this is a good agreement, good for the company and good for the taxpayer. We believe that it will again demonstrate the benefits of privatisation, enabling a business to develop in response to the market, not Whitehall or Westminster. We believe that Rover Group will benefit from shaking off once and for all the perceptions associated with more than a decade of state ownership. The agreement with British Aerospace offers the prospect of a new future and a new period of stability for Rover Group, removed from the spotlight of political controversy. It is a good deal and we should support it.

Question put, That the oiginal words stand part of the Question:—

The House divided: Ayes 198, Noes 307.

Division No. 344]
[9.59 pm


AYES


Abbott, Ms Diane
Brown, Ron (Edinburgh Leith)


Adams, Allen (Paisley N)
Bruce, Malcolm (Gordon)


Allen, Graham
Buchan, Norman


Alton, David
Buckley, George J.


Anderson, Donald
Caborn, Richard


Archer, Rt Hon Peter
Campbell, Menzies (Fife NE)


Armstrong, Hilary
Campbell, Ron (Blyth Valley)


Ashton, Joe
Campbell-Savours, D. N.


Banks, Tony (Newham NW)
Canavan, Dennis


Barnes, Harry (Derbyshire NE)
Clark, Dr David (S Shields)


Barron, Kevin
Clarke, Tom (Monklands W)


Battle, John
Clay, Bob


Beckett, Margaret
Clelland, David


Benn, Rt Hon Tony
Clwyd, Mrs Ann


Bennett, A. F. (D'nt'n &amp; R'dish)
Cohen, Harry


Bermingham, Gerald
Cook, Frank (Stockton N)


Bidwell, Sydney
Cook, Robin (Livingston)


Blair, Tony
Corbett, Robin


Blunkett, David
Cousins, Jim


Boateng, Paul
Crowther, Stan


Boyes, Roland
Cryer, Bob


Bradley, Keith
Cummings, John


Bray, Dr Jeremy
Cunliffe, Lawrence


Brown, Nicholas (Newcastle E)
Cunningham, Dr John





Dalyell, Tam
Mahon, Mrs Alice


Darling, Alistair
Marek, Dr John


Davies, Rt Hon Denzil (Llanelli)
Marshall, David (Shettleston)


Davies, Ron (Caerphilly)
Marshall, Jim (Leicester S)


Davis, Terry (B'ham Hodge H'l)
Martin, Michael J. (Springburn)


Dewar, Donald
Martlew, Eric


Dixon, Don
Maxton, John


Dobson, Frank
Meale, Alan


Doran, Frank
Michael, Alun


Douglas, Dick
Michie, Bill (Sheffield Heeley)


Duffy, A. E. P.
Michie, Mrs Ray (Arg'l &amp; Bute)


Dunnachie, Jimmy
Millan, Rt Hon Bruce


Eastham, Ken
Mitchell, Austin (G't Grimsby)


Evans, John (St Helens N)
Moonie, Dr Lewis


Fatchett, Derek
Morgan, Rhodri


Fearn, Ronald
Morley, Elliott


Field, Frank (Birkenhead)
Morris, Rt Hon J. (Aberavon)


Fields, Terry (L'pool B G'n)
Mowlam, Marjorie


Fisher, Mark
Mullin, Chris


Flynn, Paul
Nellist, Dave


Foot, Rt Hon Michael
Oakes, Rt Hon Gordon


Foster, Derek
O'Brien, William


Foulkes, George
O'Neill, Martin


Fraser, John
Orme, Rt Hon Stanley


Fyfe, Maria
Patchett, Terry


Galbraith, Sam
Pendry, Tom


Galloway, George
Pike, Peter L.


Garrett, John (Norwich South)
Powell, Ray (Ogmore)


George, Bruce
Prescott, John


Godman, Dr Norman A.
Primarolo, Dawn


Golding, Mrs Llin
Quin, Ms Joyce


Gordon, Mildred
Radice, Giles


Gould, Bryan
Randall, Stuart


Graham, Thomas
Rees, Rt Hon Merlyn


Griffiths, Nigel (Edinburgh S)
Reid, Dr John


Griffiths, Win (Bridgend)
Richardson, Jo


Grocott, Bruce
Roberts, Allan (Bootle)


Harman, Ms Harriet
Robertson, George


Hattersley, Rt Hon Roy
Robinson, Geoffrey


Healey, Rt Hon Denis
Rogers, Allan


Heffer, Eric S.
Rooker, Jeff


Henderson, Doug
Ross, Ernie (Dundee W)


Hinchliffe, David
Rowlands, Ted


Hogg, N. (C'nauld &amp; Kilsyth)
Ruddock, Joan


Holland, Stuart
Salmond, Alex


Home Robertson, John
Sedgemore, Brian


Howell, Rt Hon D. (S'heath)
Sheerman, Barry


Howells, Geraint
Shore, Rt Hon Peter


Hoyle, Doug
Short, Clare


Hughes, John (Coventry NE)
Skinner, Dennis


Hughes, Robert (Aberdeen N)
Smith, Andrew (Oxford E)


Hughes, Roy (Newport E)
Smith, C. (Isl'ton &amp; F'bury)


Hughes, Sean (Knowsley S)
Smith, Rt Hon J. (Monk'ds E)


Illsley, Eric
Snape, Peter


Ingram, Adam
Soley, Clive


Janner, Greville
Spearing, Nigel


John, Brynmor
Steel, Rt Hon David


Jones, Barry (Alyn &amp; Deeside)
Strang, Gavin


Jones, Martyn (Clwyd S W)
Straw, Jack


Kaufman, Rt Hon Gerald
Taylor, Mrs Ann (Dewsbury)


Kennedy, Charles
Taylor, Matthew (Truro)


Kirkwood, Archy
Turner, Dennis


Leadbitter, Ted
Vaz, Keith


Leighton, Ron
Wall, Pat


Lestor, Joan (Eccles)
Wallace, James


Lewis, Terry
Walley, Joan


Lloyd, Tony (Stretford)
Wareing, Robert N.


Lofthouse, Geoffrey
Welsh, Michael (Doncaster N)


Loyden, Eddie
Williams, Rt Hon Alan


McAllion, John
Williams, Alan W. (Carm'then)


McAvoy, Thomas
Winnick, David


McCartney, Ian
Wise, Mrs Audrey


Macdonald, Calum A.
Worthington, Tony


McKelvey, William



McNamara, Kevin
Tellers for the Ayes:


McTaggart, Bob
Mr. Frank Haynes and Mr. Allen McKay.


Madden, Max







NOES


Adley, Robert
Evans, David (Welwyn Hatf'd)


Alison, Rt Hon Michael
Evennett, David


Amess, David
Fallon, Michael


Amos, Alan
Farr, Sir John


Arbuthnot, James
Favell, Tony


Arnold, Jacques (Gravesham)
Fookes, Miss Janet


Arnold, Tom (Hazel Grove)
Forman, Nigel


Ashby, David
Forsyth, Michael (Stirling)


Aspinwall, Jack
Forth, Eric


Atkins, Robert
Fowler, Rt Hon Norman


Baker, Rt Hon K. (Mole Valley)
Fox, Sir Marcus


Baker, Nicholas (Dorset N)
Franks, Cecil


Baldry, Tony
Freeman, Roger


Banks, Robert (Harrogate)
French, Douglas


Batiste, Spencer
Fry, Peter


Beaumont-Dark, Anthony
Gale, Roger


Bellingham, Henry
Gardiner, George


Bendall, Vivian
Gilmour, Rt Hon Sir Ian


Biggs-Davison, Sir John
Goodhart, Sir Philip


Blackburn, Dr John G.
Goodlad, Alastair


Blaker, Rt Hon Sir Peter
Goodson-Wickes, Dr Charles


Bonsor, Sir Nicholas
Gorman, Mrs Teresa


Boswell, Tim
Gorst, John


Bottomley, Peter
Grant, Sir Anthony (CambsSW)


Bottomley, Mrs Virginia
Greenway, Harry (Ealing N)


Bowden, Gerald (Dulwich)
Greenway, John (Ryedale)


Bowis, John
Gregory, Conal


Boyson, Rt Hon Dr Sir Rhodes
Griffiths, Sir Eldon (Bury St E')


Braine, Rt Hon Sir Bernard
Griffiths, Peter (Portsmouth N)


Brandon-Bravo, Martin
Grist, Ian


Brazier, Julian
Ground, Patrick


Bright, Graham
Grylls, Michael


Brooke, Rt Hon Peter
Gummer, Rt Hon John Selwyn


Brown, Michael (Brigg &amp; Cl't's)
Hamilton, Hon Archie (Epsom)


Browne, John (Winchester)
Hamilton, Neil (Tatton)


Bruce, Ian (Dorset South)
Hampson, Dr Keith


Buchanan-Smith, Rt Hon Alick
Hanley, Jeremy


Buck, Sir Antony
Hannam, John


Budgen, Nicholas
Hargreaves, A. (B'ham H'll Gr')


Burns, Simon
Hargreaves, Ken (Hyndburn)


Burt, Alistair
Harris, David


Butcher, John
Haselhurst, Alan


Butler, Chris
Hawkins, Christopher


Butterfill, John
Hayes, Jerry


Carlisle, John, (Luton N)
Hayhoe, Rt Hon Sir Barney


Carlisle, Kenneth (Lincoln)
Hayward, Robert


Carrington, Matthew
Heathcoat-Amory, David


Carttiss, Michael
Heddle, John


Cartwright, John
Heseltine, Rt Hon Michael


Cash, William
Hicks, Mrs Maureen (Wolv' NE)


Chalker, Rt Hon Mrs Lynda
Hicks, Robert (Cornwall SE)


Channon, Rt Hon Paul
Hind, Kenneth


Chapman, Sydney
Hogg, Hon Douglas (Gr'th'm)


Chope, Christopher
Holt, Richard


Churchill, Mr
Howard, Michael


Clark, Dr Michael (Rochford)
Howarth, Alan (Strat'd-on-A)


Clarke, Rt Hon K. (Rushcliffe)
Howarth, G. (Cannock &amp; B'wd)


Colvin, Michael
Howell, Rt Hon David (G'dford)


Conway, Derek
Howell, Ralph (North Norfolk)


Coombs, Anthony (Wyre F'rest)
Hughes, Robert G. (Harrow W)


Couchman, James
Hunt, David (Wirral W)


Cran, James
Hunter, Andrew


Critchley, Julian
Hurd, Rt Hon Douglas


Currie, Mrs Edwina
Irvine, Michael


Curry, David
Irving, Charles


Davies, Q. (Stamf'd &amp; Spald'g)
Jack, Michael


Davis, David (Boothferry)
Jackson, Robert


Day, Stephen
Janman, Tim


Devlin, Tim
Johnson Smith, Sir Geoffrey


Dickens, Geoffrey
Jones, Robert B (Herts W)


Dicks, Terry
Jopling, Rt Hon Michael


Dorrell, Stephen
Kellett-Bowman, Dame Elaine


Douglas-Hamilton, Lord James
Key, Robert


Dover, Den
King, Roger (B'ham N'thfield)


Dunn, Bob
Kirkhope, Timothy


Durant, Tony
Knapman, Roger


Dykes, Hugh
Knight, Greg (Derby North)


Eggar, Tim
Knight, Dame Jill (Edgbaston)


Emery, Sir Peter
Knowles, Michael





Knox, David
Rowe, Andrew


Lamont, Rt Hon Norman
Ryder, Richard


Lang, Ian
Sackville, Hon Tom


Latham, Michael
Sainsbury, Hon Tim


Lawrence, Ivan
Scott, Nicholas


Lawson, Rt Hon Nigel
Shaw, David (Dover)


Leigh, Edward (Gainsbor'gh)
Shaw, Sir Giles (Pudsey)


Lennox-Boyd, Hon Mark
Shephard, Mrs G. (Norfolk SW)


Lester, Jim (Broxtowe)
Shepherd, Colin (Hereford)


Lightbown, David
Shepherd, Richard (Aldridge)


Lilley, Peter
Shersby, Michael


Lloyd, Sir Ian (Havant)
Sims, Roger


Lloyd, Peter (Fareham)
Skeet, Sir Trevor


Lord, Michael
Smith, Tim (Beaconsfield)


Lyell, Sir Nicholas
Soames, Hon Nicholas


McCrindle, Robert
Speller, Tony


Macfarlane, Sir Neil
Spicer, Sir Jim (Dorset W)


MacKay, Andrew (E Berkshire)
Spicer, Michael (S Worcs)


Maclean, David
Squire, Robin


McLoughlin, Patrick
Stanbrook, Ivor


McNair-Wilson, M. (Newbury)
Stanley, Rt Hon John


McNair-Wilson, P. (New Forest)
Steen, Anthony


Madel, David
Stern, Michael


Major, Rt Hon John
Stevens, Lewis


Malins, Humfrey
Stewart, Andy (Sherwood)


Mans, Keith
Stewart, Ian (Hertfordshire N)


Maples, John
Stokes, John


Marlow, Tony
Stradling Thomas, Sir John


Marshall, John (Hendon S)
Sumberg, David


Marshall, Michael (Arundel)
Summerson, Hugo


Martin, David (Portsmouth S)
Tapsell, Sir Peter


Mates, Michael
Taylor, Ian (Esher)


Maxwell-Hyslop, Robin
Taylor, John M (Solihull)


Mellor, David
Taylor, Teddy (S'end E)


Miller, Hal
Tebbit, Rt Hon Norman


Mills, Iain
Temple-Morris, Peter


Miscampbell, Norman
Thompson, D. (Calder Valley)


Mitchell, Andrew (Gedling)
Thompson, Patrick (Norwich N)


Mitchell, David (Hants NW)
Thorne, Neil


Moate, Roger
Thornton, Malcolm


Monro, Sir Hector
Townend, John (Bridlington)


Montgomery, Sir Fergus
Townsend, Cyril D. (B'heath)


Moore, Rt Hon John
Tracey, Richard


Moss, Malcolm
Tredinnick, David


Mudd, David
Trippier, David


Neale, Gerrard
Trotter, Neville


Needham, Richard
Twinn, Dr Ian


Nelson, Anthony
Vaughan, Sir Gerard


Neubert, Michael
Viggers, Peter


Newton, Rt Hon Tony
Waddington, Rt Hon David


Nicholls, Patrick
Wakeham, Rt Hon John


Nicholson, David (Taunton)
Waldegrave, Hon William


Nicholson, Emma (Devon West)
Walden, George


Onslow, Rt Hon Cranley
Walker, Bill (T'side North)


Oppenheim, Phillip
Waller, Gary


Owen, Rt Hon Dr David
Walters, Dennis


Page, Richard
Ward, John


Paice, James
Wardle, Charles (Bexhill)


Patnick, Irvine
Watts, John


Patten, John (Oxford W)
Wells, Bowen


Pattie, Rt Hon Sir Geoffrey
Wheeler, John


Pawsey, James
Widdecombe, Ann


Peacock, Mrs Elizabeth
Wiggin, Jerry


Porter, Barry (Wirral S)
Wilshire, David


Porter, David (Waveney)
Winterton, Mrs Ann


Portillo, Michael
Winterton, Nicholas


Powell, William (Corby)
Wolfson, Mark


Price, Sir David
Wood, Timothy


Raison, Rt Hon Timothy
Woodcock, Mike


Redwood, John
Yeo, Tim


Renton, Tim
Young, Sir George (Acton)


Riddick, Graham
Younger, Rt Hon George


Ridley, Rt Hon Nicholas



Ridsdale, Sir Julian
Tellers for the Noes:


Rifkind, Rt Hon Malcolm
Mr. Robert Boscawen and Mr. Tristan Garel-Jones.


Roberts, Wyn (Conwy)



Rost, Peter

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House believes that the recent improvement in Rover Group's performance owes much to the efforts of the workforce and management combined, that further improvement can best be achieved by returning the business to full private ownership, that the proposed takeover by British Aerospace is to be warmly welcomed and is in the interests of Rover Group's employees as well as those of its suppliers and dealer network, that future investment should be a matter for the management of the business and the prospective new owners, and that the overall terms of the sale agreement are in the interests not only of the companies but also of the taxpayer.

Goods Vehicles

Mr. Speaker: Before I call upon the Minister to move the motion, I must call the attention of the House to a misprint on the Order Paper in line 6 of the motion. After the word "suppression" the words
so as to make its application, like the proposed Directive on
should he inserted.

The Parliamentary Under-Secretary of State for Transport (Mr. Peter Bottomley): I beg to move,
That this House takes note of European Community Document No. 8284/87 on spray suppression devices and lateral protection (sideguards) for certain categories of motor vehicles and their trailers; and endorses the Government's objectives of securing Community arrangements which would not require more stringent standards than those required in the United Kingdom at present, and amendment of the proposed Directive on spray suppression so as to make its application, like the proposed Directive on sideguards, permissive rather than mandatory, and restricted in scope to the same categories of vehicles as are covered by the existing United Kingdom Regulations.
I am grateful to the hon. Member for Stretford (Mr. Lloyd) for pointing out that some words had been omitted from the motion.
Today we are to consider two proposals from the Commission. They were issued by the Commission in September last year. Both proposals are for directives for heavy lorries and their trailers, one for spray suppression devices and the other for lateral protection devices or sideguards. The proposals are for a mandatory directive for spray suppression devices and a permissive directive for sideguards. Both invoke article 100 as their legal basis. They would both have a dual role of making progress and improving safety and avoiding the possibility of member states erecting barriers to trade by applying unique national standards.
In the negotiations in Brussels the measure on spray suppression devices has aroused considerable opposition from some member states. It is unlikely that it will be adopted in the foreseeable future. There is likely to be agreement that the proposal for sideguards should be amended to correspond with the Economic Commission for Europe regulation. All member states are likely to find such an amendment acceptable.
Although at present there seems little prospect of a common position being adopted by the Council, there is a possibility that as the current presidency draws to a close it will try to achieve a common position to add to its tally of successes. We have recently been advised that such an attempt could be made this month. In our negotiations in Brussels these two proposals have been dealt with together. They are separate in their subject matter.
The sideguard proposal sets standards for the design and construction of lateral protection to be fitted to heavy goods vehicles and their trailers over 3·5 tonnes maximum gross vehicle weight. The guards cover the open space in front of the rear wheels and are intended to prevent pedestrians and cyclists from falling under the side of the vehicle and being run over by the rear wheels.
We have had requirements in regulations for sideguards in the United Kingdom since 1983. France and Holland also have similar requirements for them on some categories of heavy vehicle. To achieve harmonisation of requirements throughout Europe, discussions have been held in Geneva and an ECE regulation has been prepared.


This contains, for heavy vehicles over 12 tonnes and trailers over 10 tonnes maximum weight, requirements for flat sideguard rails similar to those in our present construction and use regulations. For vehicles from 3·5 tonnes to 12 tonnes the ECE regulation allows round bars, as specified in the French regulations, instead of flat rails. In our view, the round bars proposed for smaller goods vehicles offer slightly less protection than the flat rails which the current United Kingdom regulations require. A concession on that point was necessary to reach European agreement for flat rails to be part of the standard in the ECE regulation applicable to the heavier goods vehicles and trailers which predominate in international traffic. Such an agreement is in our interests as it paves the way for international haulage vehicles from Europe being fitted with sideguards similar to those required for United Kingdom registered vehicles.
All member states were party to the discussions in the United Nations ECE. In the negotiations in Brussels there was agreement among member states that the Commission proposal for sideguards should be slightly amended to align with the ECE regulation. There are signs that the Commission will propose such an amendment. It has not yet done so. If it does, it will be in the United Kingdom interest to support the sideguard proposal as it would then align more closely with the present United Kingdom requirements.
There are two implications for vehicles operating in the United Kingdom, be they purely national or international operations. It would be a continued requirement for operators or manufacturers of trucks over 12 tonnes and trailers over 10 tonnes to fit the more robust flat rail sideguards. However, for lighter vehicles they would have the option of fitting the rounded sideguards on very much the established self-certification basis. If they chose to fit the sideguards to meet the requirements of the directive, they would need type approval. In effect, I envisage maintenance of the status quo on this provision.
In addition, international transport operators, that is, those registered in the United Kingdom and in those member states that adopt the directive, will now have to fit sideguards. Gone will be the opportunity to dodge United Kingdom law by registering as an international operator.
I will now turn to the question of spray suppression devices, the second of the Commission proposals which we are to consider. Since 1986 the United Kingdom has been the only country to have requirements in regulations for the design and construction of spray suppression devices. These have been required to be fitted only to new heavy goods vehicles and trailers over 12 tonnes and 3·5 tonnes maximum gross weight respectively and to trailers with two or more axles already in service over 16 tonnes maximum gross weight.
The technical contents now contained in the Commission's proposals are based on and are similar to the present United Kingdom requirements for spray suppression devices.

Mr. Tony Marlow: Like my hon. Friends and Opposition Members, I have had quite a lot of experience of driving along motorways. I have often done so in a typical English summer when it is pouring with rain and there is about an inch of rain in five hours. Hon. Members will have noticed, to their dismay and distress, lorry overtaking lorry under these conditions. They will themselves have attempted to pass the second

lorry in the overtaking lane when that lorry was going at about 70 mph. There is no visibility. One cannot see. One is going through a mist and is putting one's life in the hands of the Almighty. It is incredibly dangerous. That is happening under the regulations which my hon. Friend says we already have in the United Kingdom and which we are asking the Europeans to bless and agree with.
My hon. Friend is normally robust on the subject of road safety. Cannot he come forward with a proper system so that the motoring public is not put at risk by the maniac juggernaut drivers who travel at speeds which are too fast when the roads are awash with water? It is devastatingly dangerous.

Mr. Bottomley: My hon. Friend makes his point with vigour. If I had my way, and if we were debating my prejudices rather than the draft directive of the European Commission, I would put forward a proposal that any lorry which did not have effective spray suppression would be allowed to travel at only 50 mph if its windscreen wipers were on. But I have not yet managed to convince my officials or the European Commission about that. My hon. Friend has made the sort of point which has often been made to me by my hon. Friend the Member for Devon, North (Mr. Speller), who will probably want to speak.
I return to the technical contents of the Commission's proposals which are based on or are similar to the present United Kingdom requirements for spray suppression devices. Although they are similar, there are a small number of differences where the technical content in the Commission's proposals departs from the technical characteristics of our regulations, particularly in the positioning of the mudflaps more closely behind the tyre which may result in them being damaged more easily than with the United Kingdom requirements, without them necessarily being more effective in reducing spray. These points of difference in the detail of the technical content have been discussed in negotiations in Brussels but would need to be resolved much more closely to our requirements before they are likely to be acceptable to the United Kingdom.
As I outlined earlier, the United Kingdom has taken the lead on spray suppression devices; that news will he welcome to my hon. Friends. The United Kingdom is the only country to have such requirements. For retrospective fitment the United Kingdom requirements apply only to trailers over 16 tonnes maximum gross vehicle weight with two or more axles. Although there were only 140,000 of these, we allowed three years for the retrospective fitting of these devices on these vehicles.
As proposed in article 9, the directive brings the weight down to 3·5 tonnes maximum gross vehicle weight and makes it applicable to all goods vehicles and trailers above that weight, both new and in service. This will considerably increase the number of goods vehicles, by about 430,000, which would have to be retrospectively fitted with these devices. This would be a mammoth task three times greater than previously experienced in the retrofit programme on heavy trailers. From our experience, it is clear that the Commission's deadline of 1989 for the completion of its proposed retrospective fitment could not be met. Such a programme would take years and it is estimated that it would cost about £40 million.
The United Kingdom Government are not in favour of compulsory retrospective fitment of anti-spray devices to


all goods vehicles from 3·5 tonnes upwards. Heavy trailers of four or five-axle articulated vehicles are already required to be fitted with these devices. These constitute 40 per cent. of motorway goods vehicle traffic. Their size, speed and generally poor aerodynamics and weight result in them being significant spray propagators, much more so than the relatively light, potentially more sleek and better mud-guarded lighter goods vehicles. Their length makes overtaking in spray particularly hazardous, but that is not the case with smaller vehicles. It is on motorways that speeds are highest and the spray worst.
Other types of vehicle such as rigid lorries and tractor units on the roads now have reasonable mudguards, and so a retrospective programme would offer minimal spray nuisance reduction and would not be cost effective. Application to new heavy vehicles is relatively simple and cost effective. In general, we get good value from the fitting of these devices to vehicles that have high motorway mileage. This is not the case for lorries below 12 tonnes gross. These smaller vehicles generally do not generate spray to the same extent as the heavier ones with greater number of axles and, in addition, they are most generally used on ordinary roads where spray is much less of a problem than on motorways.
The type and condition of roads, speed limits and climatic conditions can all affect spray. These vary considerably across the Community. It is likely that each member state will want to select the categories of vehicles to which these devices should be fitted to suit the particular operating conditions in each country—if they wish to fit them at all. It would be difficult to include all these variations under a mandatory structure. A permissive directive would allow such a flexible approach. In negotiations in Brussels no member state was able to support the Commission's proposals for the directive to be mandatory. Adoption in its present form is unlikely to achieve common agreement. For the reasons I have outlined, we shall be arguing strongly against the retrospective aspects of the directive other than for heavy trailers. We shall support other member states in their rejection of mandatory provisions.
The Government would support amendments to the proposed anti-spray directive to make its application permissive and to restrict its application to the same vehicles as those covered by the existing United Kingdom requirements Our record in both these areas is one of trying to promote sensible advances in improved safety benefits within technically and economically realistic limits.

Mr. Barry Sheerman: Can the Minister enlighten the House about the exact meaning of "a permissive directive"?

Mr. Bottomley: A permissive directive allows member states to make requirements of their national operators.
Anti-spray devices and sideguards improve the safety of heavy goods vehicles. International directives will ensure that United Kingdom operators, whether engaged in national or international transport, will be required to fit the devices. A permissive directive on spray will give the best chance of a directive being promulgated. The motion promotes the best interests of the United Kingdom.

Mr. Tony Lloyd: I relished the moment of rare candour when we saw what might be described in unparliamentary terms as the real Peter Bottomley inside the Minister. I am rather intrigued by this concept of the separation of power and responsibility. There is the responsible man and the powerless Minister. As the Minister knows, I have some respect for his qualities. He speaks well about road safety but clearly he is so shackled by the culture and inheritance of his Department that the problems begin at that point.
As the debate is about the manner in which the European Community is approaching the safety of heavy goods vehicles and about the manner in which the Department of Transport is approaching such vehicles, it might be worth refreshing hon. Members' memories about the comments made in the 18th report of the Public Accounts Committee published in February. On the regulation of heavy lorries it said:
Throughout our examination we were very concerned about the long delays by DTp in addressing fundamental issues about the effects of heavy lorries and a lack of urgency in promoting essential research.
Unfortunately, that charge is well made and difficult for the Department to describe as unfair.
Although the Minister tells us that the British Government were the first, and the only Government so far, to adopt spray suppression measures, those measures were hastily adopted and showed signs of being a political response to a problem about which the hon. Member for Northampton, North (Mr. Marlow) made the usual Comment of the motorist. In reality, inadequate research had been done on that basis. The Government's White Paper in response to the Armitage report in 1981 said:
A programme of research and trials on reducing spray from heavy lorries is also nearing completion. The Government hopes this research will produce effective solutions to the problem.
Unfortunately, despite the passage of seven years, that research has not produced the answers.

Mr. Peter Bottomley: Perhaps in company with the Parliamentary Advisory Council on Transport Safety, which also has a keen and serious interest, the hon. Gentleman might be able to accept an invitation, which I extend now, to come and see spray suppression devices being tested at the Transport and Road Research laboratory at Crowthorne. We do not know everything that is to be known, but we know a great deal more than we did when the Armitage report came out. Most of us, including my hon. Friend the Member for Northampton, North who may be on his way back, will realise that many lorries have effective spray suppression. The trouble is that many have not.

Mr. Lloyd: In that case, if the research exists but has not been implemented, we have not advanced the argument or the level of safety. There is still considerable confusion about the merits of spray suppression. The Freight Transport Association, which does not and cannot claim to come to the debate with clean hands, makes the point about the research that it conducted that
the results of the tests raised considerable doubts as to the ability of systems constructed to the standard to make any noticeable impression on the nuisance of spray from large commercial vehicles.
If the FTA is wrong, at no point has the Department of Transport published in a systematic form the evidence that


shows why and how it is wrong. It is important that that should be done because the haulage industry clearly will resist any attempt to increase its operating costs.

Mr. Sheerman: Will my hon. Friend give way on that point?

Mr. Lloyd: In a moment. Clearly the FTA will resist any measure that increases its costs. It is the responsibility of the House to make a rational judgment about the needs of safety irrespective of that resistance. But if the haulage industry resists what it sees as very arbitarily laid standards, that would increase its credibility in other areas and do no service to the argument about heavy goods vehicle safety.

Mr. Sheerman: Will my hon. Friend enlighten the House about how much the FTA thinks that fitting such spray suppression equipment that is currently mandatory in this country puts on the cost of the average vehicle that its members run?

Mr. Lloyd: The Minister will confirm whether I am right or wrong, but the generally accepted figures are about £40 million initially, and then some £2 million on an annual basis.

Mr. Peter Bottomley: If the whole of the draft directive came into effect, as the FTA and the hon. Members for Stretford (Mr. Lloyd) and for Huddersfield (Mr. Sheerman) know, the figure would be insignificant in terms of the cost of buying a new HGV. The real question that we are considering is whether it is worth applying the directive retrospectively to lighter goods vehicles. In practice, it is generally accepted that it is not. It is really a question whether we can get the heavy goods vehicles to have effective spray suppression and whether we continue—and the Government need to take a lead in this—the research that will lead to even more effective spray suppression. About two thirds of the water thrown up by an HGV at 60 mph can be caught and demisted with the present knowledge. We hope to be able to go further.

Mr. Lloyd: A lorry travelling at 60 mph throws up about 60 gallons of water a minute, so about one gallon is still thrown on the car behind every three seconds. That is a lot of water.
My hon. Friend the Member for Huddersfield (Mr. Sheerman) may have misunderstood me. The Department has sat on the research for too long. This issue has not been a priority since 1981 but the Minister ought to be able to tell us what the research shows. The Department should be considering other methods, such as different road surfaces. The experience of the Netherlands is that an improvement can be achieved by increasing the porosity, if that is the right word, of roads.

Mr. Bottomley: Permeability.

Mr. Lloyd: I am advised that it is permeability, and on this occasion I am prepared to take the Minister's advice.
When the Minister spoke as a human being and not as a powerless Minister, he said that the problem is speed. The Department's national speed survey for 1982—the most recent available—suggested that nearly 40 per cent. of HGVs break the 60-mph limit on motorways. It is recognised that the spray problem really begins at speeds over 40 mph and that the problem is severe at 60 mph as

it grows out of all proportion to the increase in speed. The failure to detect those who break the speed limit is crucial here. We do not need further research, just resources.
What normally happens in the Council of Ministers when an issue such as this is raised is that it is tossed around until a compromise is reached. With spray suppression, that compromise will almost inevitably be arbitrary and irrelevant to most member nations. It does not take a genius to recognise that the problem in Greece or southern Italy is fundamentally different from that in Britain. It is therefore likely that southern European members will not accept spray suppression measures in any form.
I am dubious about having permissive regulations. They would provide a ceiling but no floor. When the Department of Transport finally makes a research breakthrough it will not be able to commit this country to an improved standard of spray suppression, should it be necessary. If a permissive document were accepted, we would be limited by the highest standards set by the European Community. The Minister should clarify that important issue.
I do not believe for one second that this directive has a chance of doing anything. It is almost irrelevant to be detaining the House discussing it. We want national legislation that addresses the problems of road surfaces and speeding heavy goods vehicles and tries to introduce standards that will guarantee the maximum possible reduction of nuisance from spray.
I should like to ask the Minister a number of questions about sideguards, or lateral protection as the Eurocrats prefer to call them. They may appear to be technical, but nevertheless they are important. At present, the United Kingdom's standard of sideguard protection applies to heavy goods vehicles of 12 tonnes or more. Earlier, the Minister managed to clear the fog about the wording of the motion, but he has not managed to clear the intellectual fog concerning the figure of 12 tonnes. The probability of a child being dragged off a bicycle under the back wheels of a lorry depends not on axle or laden weights but on the physical construction of the space between front and rear wheels and the possibility of pedestrians and cyclists—the two most obvious groups—disappearing into the space at the side of the lorry. I know of no report—be it the Armitage report or the report of the Transport Select Committee—that recommended the fitting of sideguards to lorries of 12 tonnes. I foresee no reason why the restriction should apply simply to lorries weighing 12 tonnes. I hope that the Minister will consider seriously why we should not increase the applicability of sideguards to heavy goods vehicles that at present are exempted.
I should like to put a point to the Minister that was made clearly at the 10th international technical conference on experimental vehicles, about which the Minister knows much, partly because it was hosted by the "Department of Transportation, of Her Majesty's Government", as it is described in the conference report.

Mr. Peter Bottomley: Where did that come from?

Mr. Lloyd: I can assure the Minister that this is not a leak from the Department of Transport. I have not been as lucky as some of my other colleagues with leaks from other Departments.
The conference discussed sideguards and said:
With a sideguard fitted that just meets the UK


construction and use
regulation, the pedal cyclist was run over"—
hon. Members will be glad to hear that this was a simulated test—
by the wheels of the semitrailer in about 40 per cent. of the test runs.
That test conformed to current standards, but when the sideguard was reduced to a level of 300mm above the ground the probability of the cyclist being run over was reduced to almost zero.
Experience from Japan suggests that a 400mm level of operation is not only practical but effective in reducing death. While the present regulations almost certainly have reduced the death rate, an increase to a higher standard would reduce it further. I urge the Minister to consider that matter seriously.
The Minister was wrong to argue that these regulations will pave the way for European international haulage vehicles being fitted with sideguards similar to those fitted to British vehicles. The directive, if implemented on a permissive basis, will allow European heavy goods vehicles from countries that choose not to adopt sideguards standards to travel on British roads. That would not only give them a competitive advantage over British operators but would make our roads considerably less safe than they are already. The Minister should look carefully at permissive legislation.
There is a major omission. The overwhelming advice from all reputable documents in the past has been that the greatest area of improvement in the safety of heavy goods vehicles lay in the introduction of front underrun guard protection. That was the Armitage report's recommendation. It said:
We consider that the greatest and most worthwhile improvements are likely to be obtained from the introduction

of under-run and other guards all round the lorry, including energy-absorbing guards. We recommend that these should be made mandatory for all new lorries.
Seven years on we are still awaiting that. That may reflect again the lack of priority given to such safety research within the Department. In 1981 the Department felt that it was close to an acceptable solution and we still do not have that. That should be in the European directive if it is to have any force. It would be of far more significant benefit to road safety than spray suppression or sideguards, but I do not want to dismiss the value of both those things.
The concept of European legislation is rather dubious because we do not have the same interests on our roads as those that apply in other countries. It is not logical to say that the needs and interests of the travelling public in Greece are the same as those in Britain. We have different climates, different road construction and so on. For those reasons, it concerns me greatly that EC directives may hamper us in introducing the highest possible safety standards. I have to agree with the Government's conclusion that the correct thing is to bury the directives completely. Even the directive on sideguards would prevent the Government introducing a higher standard, which is what the Government should be looking at.
That is not a cop-out for taking some action against lorries coming to this country. In 1992 we face the prospect of cabotage. We face the prospect of lorries that have been registered elsewhere coming on to British roads. They will use standards introduced for different road systems. We know—the Minister knows this—that there are British companies operating on British roads which have chosen to register themselves in the Netherlands to avoid some of the existing regulations for heavy goods vehicles. That should be unacceptable and we should not allow the European directives to cloud the issue. It is for the Government to ensure that safety is paramount and to see that what is introduced applies not only to national operators but to international operators on British roads.

Mr. Ivan Lawrence: I congratulate my hon. Friend the Minister on the reasonable approach that he has adopted to limit the excesses of the European Community in this important matter. However, rather than devoting so much of his attention to exempting small vehicles from the mandatory Community proposals, perhaps he would serve us better if he were to do something more than his Department has done in the past to reduce the spray from tyres on United Kingdom vehicles that threaten the lives of so many of us who use the motorways.
The Burton constituency has delighted the world over the years with the excellence of its products. I should mention Marmite, Bovril, Branston pickle, the wonderful beer products—Double Diamond, Bass, White Shield, Marston's Pedigree—the new diggers from JCB, the new tyres from Pirelli, the new building systems from Conder, the new civil engineering schemes from Douglas and the new plastic products from BTR. Therefore, it is no surprise that one of my constituents, Mr. Maurice Goodall, formerly of Barton-under-Needwood and now of Rolleston-on-Dove—two delightful villages in my constituency that I hope my hon. Friend the Minister will visit shortly—has invented an anti-spray device that works.

Mr. Peter Bottomley: Only this morning, in anticipation of the debate, I travelled past Burton and saw the Bass chimney. As a partial vegetarian, I want my hon. Friend to know that I make an exception for Bovril and that I enjoy the Marmite as well.

Mr. Lawrence: I am grateful to my hon. Friend for his kind remarks. The trouble is that too many Ministers pass Burton and do not go into it. If they visited it, they would be better able to enjoy the outstanding products that a lifetime of dedicated labour and intelligent, well-intended and progressive management have produced for a wonderful town.
Mr. Maurice Goodall is no crank. He is a legitimate, sensible and experienced inventor. It surprises me that the Government seem persistently to show little interest in his invention. The device for suppressing spray from heavy vehicles is one whose efficiency of 93 per cent. to 98 per cent. is 10 times more effective than the 65 per cent. that is required by the BS AU 200 specification. Geometrical formulae have been used to overcome the damage caused by the wheels of heavy vehicles and the device negotiates obstacles 10 in. high when a vehicle is fully laden. This is the product of research and development that has absorbed no fewer than 40,000 hours during the past 11 years of Mr. Goodall's time.
Does the Government's reaction stem from the effectiveness of current anti-spray devices? As my hon. Friend the Member for Northampton, North (Mr. Marlow) has said, any motorist travelling along a motorway in bad weather takes his life into his hands when he overtakes heavy vehicles that are churning up so much spray. We can send men to the moon, and we have wonderful devices that deliver messages to us wherever we happen to be in the House, but it seems that we cannot eradicate or reduce the murderous spray generated by heavy vehicles.
It is clear from the comments on the European Community proposals that have been made by the organisations most closely related to this issue that the

safety effect of many of the present spray devices leaves much to be desired. The Freight Transport Association states:
the equipment for its suppression, either under present British rules or under those which the Commission proposes, has at best a marginal effect.
VAG (United Kingdom) Ltd. states:
The company suggests that standards developed to meet relevant British regulations have been hastily concocted. It argues that standards of design have been over-emphasised at the expense of standards of performance and that there is no evidence that these British standards have had the effect of significantly reducing spray emissions.
Volvo Trucks (Great Britain) Limited says:
The Company concludes that further technical work would be advisable before the adoption of any Community rules and that since the bulk of the relevant expertise is British, this should be carried out in this country, with proper consultation with interested parties.
It is quite clear from our own experience and the knowledge and experience of various organisations that the present anti-spray devices are not sufficiently effective and efficient to save our lives.
I have been involved with Mr. Goodall for four years, during which time he has been trying to interest the Department in his device. Correspondence has been travelling backwards and forwards and there may have been a meeting or two, but still nothing is done. The matter is now in the hands of Mr. Robert Moreland, who was the Member of the European Parliament for the Staffordshire, East constituency until the last European election, when he was less than fortunate. I have no doubt that he will return to the European Community, where he currently serves on a number of transport committees. Mr. Moreland is doing his best to bring Mr. Goodall's invention to the attention of those who apparently will do something in the European Community.
I propose to hand to my hon. Friend a dossier of documents, which are now slightly out of date but can immediately be updated. It is clear that, so excellent is the tradition of creative, progressive developments in my constituency, so confident can we be when an excellent inventor comes along with an excellent and desirable product, that I can draw the conclusion only that, although the documents have, over the years, been handed to the Department, they have not been brought to the attention of my hon. Friend who, I know, personally considers anything that might contribute to road safety. I am grateful to my hon. Friend for taking the documents. I hope to hear further from him so that lives can be saved by the excellent invention of my constituent Mr. Goodall.

Mr. Barry Sheerman: I welcome the hon. and learned Member for Burton (Mr. Lawrence) to the ranks of those hon. Members who want regulation on matters relating to road safety. Had Mr. Maurice Goodall been involved in the invention of seat belts, I wonder whether the hon. and learned Gentleman would have paid the glowing tributes that he has this evening. However, I welcome any late converts to regulation on road safety matters.

Mr. Lawrence: The hon. Gentleman will recall that I was not opposed to having seat belts, wearing seat belts or improvements to seat belts. I was opposed only to compulsion.

Mr. Sheerman: I misunderstood. I thought that the hon. and learned Gentleman not only wanted his constituent's invention to be introduced, but wanted it to be fitted to heavy goods vehicles to protect people driving on roads.

Mr. Peter Bottomley: I say confidentially to the hon. Gentleman that he should lay off my hon. and learned Friend. It is worth recognising that, because of my hon. and learned Friend's relative reticence, we managed to get the child restraint Bill through the House. We may yet have to consider Lords amendments, and I do not want to do anything that might in any way provoke my hon. and learned Friend to think that fluoride has anything to do with that Bill.

Mr. Sheerman: I think that both the Minister and the hon. and learned Gentleman understand that my comments were light badinage.
We are discussing a serious matter that has been tucked away late in our proceedings. I campaigned vigorously for anti-spray and anti-splash devices to be fitted to heavy goods vehicles because of the large number of accidents resulting in death and serious injury to innocent people. It always surprises me that the consumers on motorways and other roads have not been more vociferous or active about the conditions that they put up with when travelling. It must be unique for me to agree with the hon. Member for Northampton, North (Mr. Marlow), but it is high time that there was effective regulation of vehicles that cause dangerous splash and spray.
I was part of a successful campaign to introduce regulations on splash and spray that were as good as we could achieve at that time. The nature of research means that we have to accept the technical device that is effective at that time. Science and technology always move on. I am suspicious of lobbies and spokesmen for different industry groups who say, "Don't introduce this standard; something is coming over the horizon that will be 100 per cent. perfect and wonderful." If a splash or spray device is produced that is 40 or 60 per cent. effective, let us have it and wait for the 100 per cent. to follow, and then go for a higher standard in the fullness of time.
I am always suspicious of the Road Haulage Association Ltd. and similar organisations, whose common denominator seems to be opposition to anything that will cost their members a few pennies or a few pounds. I do not say that in a narrow, nationalistic sense because I have spoken—and I must declare this interest—for Monsanto in the United States about the British experience and about how effective it had been in reducing splash and spray. That was something on which we showed the way in this country, so I am sad at the present situation.
Three years ago, we had Road Safety Year, which was introduced by the European Commission. I am a late convert to Europeanism. For many years I campaigned against the Common Market, although later I was convinced that it was something we had to accept. Even so, I get rather cross when I see this kind of directive, which brings everything down to the lowest common denominator. We have lost the opportunity for countries to lead the way and for the best practice to be adopted. This directive is permissive and a cop-out. It allows countries which want

a higher standard to stay with it and introduce one, and others to opt out. That is a sad state of affairs, when the best practice is the thing to aim for.
One question the Minister has not answered—it is an aspect on which he has not campaigned vigorously enough—is what is to be done about those vehicles which arrive at our Channel ports and drive on British roads, causing as much splash, spray and danger as British vehicles. They will be largely unregulated. They may come from dry countries such as Spain and Greece, which do not see it as being in their short-term interest to introduce appropriate measures. However, when vehicles from those countries reach German, French and British roads, which are wetter, they ought to be regulated in the same way as other safety regulations are applied to foreign vehicles travelling on our roads.
Year after year, the number of non-British European vehicles travelling on British motorways increases. Hon. Members can see that for themselves as they drive to and from their constituencies. To have rules and regulations covering only British heavy goods vehicles is plainly daft. I refer to Norfolk Line and to the excellent speech of my hon. Friend the Member for Stretford (Mr. Lloyd) about sideguards. He made only one slip on the subject of splash and spray, and perhaps that was because he was briefed by different people. In terms of splash and spray, we must acknowledge that it is not good enough to accept vehicles from other countries entering Britain and causing a great deal of damage to citizens driving on our roads.

Mr. Tony Lloyd: My hon. Friend admits that he is a late convert to the European dream—although I still regard it as being a pipedream rather than an ideal. Nevertheless, the danger of the European directive in being permissive is exactly as has been pointed out by my hon. Friend. It will not only allow vehicles from other European countries to enter Britain but will also make it impossible for the Government to do anything to make them conform to the British standard. The directive will allow foreign vehicles to operate at the lower standard.

Mr. Sheerman: My hon. Friend is absolutely right. I was merely going to say that he was too gentlemanly to mention that Norfolk Line and others are registering their fleets in other countries to evade simple safety regulations that do not cost all that much money.
It was part of European Road Safety Year to act on those two matters, and it is sad for future campaigns that none of the objectives of Road Safety Year are to be achieved, because it means that the European Commission and the Community cannot deliver. It is a kind of opt-out Community. As my hon. Friend says, what we need is best practice in the Community, so that we are all protected evenly across all countries.
I had the misfortune to travel from Felixstowe to Bury St. Edmunds. The experience of driving in wet weather on that road, where the percentage of foreign vehicles is very high, shows in grim and graphic detail the problems of the permissive directive approach.
I agree with my hon. Friend's remarks about side underruns, and about the need to grasp the nettle of front underruns. Many members of the British public do not understand that front underruns are the kind with which most vehicles are involved in accidents, and we must take some action on them.
I regret the regulations. We should not reach a stage at which the European Community merely says that there are good standards achievable on the basis of the technology that we have now. That may be the technology that the constituent of the hon. and learned Member for Burton is about to introduce, but whatever it is, it should be for all member states.

Mr. Tony Speller: The hon. Member for Huddersfield (Mr. Sheerman) can be brief at greater length than any other hon. Member who has contributed to the debate. I shall seek to be even briefer.
First, let me ask my hon. Friend the Minister not to try to avoid responsibility outside the motor industry. It is far too easy to do what we all do rather glibly and blame the road haulier and the designer. We should also think about the roads. Many parts of the country have no motorways and never will have, but they do have quite long, wide roads, and the water sweeping across them makes them more dangerous than motorways.
Much of the problem relates to road design—to windbreaks and lightbreaks. It is too easy to blame the heavy lorry and the motorway. I ask my hon. Friend to bear in mind the side wind, which is just as important. It is patent to anyone who drives. as I frequently do, along 50 miles of rather poor west country road—shortly to be improved by the link road to Barnstaple—and then on to the M5 and the M4, that side winds and poor visibility cause equal danger on the bad road.
Every hon. Member who has spoken has referred to "passing" when they mean overtaking. There is frequently a danger of approaching a vehicle and then going past it through a sheet of water, possibly finding some fool coming up behind the lorry and seeking to overtake. The great mistake is always to blame the awful juggernaut or road haulier on the wet motorway. I suspect that nothing in aerodynamics will ever stop spray from coming up on a wet road when a fast vehicle is going along it, whatever the shape of that vehicle. As more wide but single carriageway roads are built, there is an increasing danger of the hard cross wind on exposed parts.
I shall say no more except to thank my hon. Friend the Minister for his great concern about road safety. It is always a pleasure to listen to what he says, even if our constituents—particularly road hauliers—do not always agree.

Mr. Ian Mills: The problem is complex; the solution should be easy. I spent 20 years as a tyre designer and part of the problem is the design of the tyre. I still have a strong interest in tyres and in roads, as my hon. Friend the Minister knows. Part of the problem is that roads are not porous. Water does not disappear down into roads; it goes out at the sides. Roads have to be properly drained. We have to find a solution in the design of both concrete and asphalt roads, as well as anti-spray devices.
Having read the European directive, I am appalled to see that under category II(1) it says that devices exist to eliminate spray, and that
Both types of material have been developed over the last few years in Europe and elsewhere and are being produced by at least ten or more manufacturers.
I was present at least 10 years ago—if not 15 or 20 years ago—when Monsanto and others came up with what they

called the plastic grass solution and the rubber mat solution. The solution has been available in various forms for over 10 years. All this talk about technicalities really makes me wild. My constituency includes the M42 and the M6—right in the heart of England—and I travel those motorways often. However, I still do not see any beneficial results from what we have done as a Government in seeking to ensure that heavy goods vehicles create less spray. I still have many constituents saying to me, "You said 10 or 20 years ago that the technical solution was there. What are you going to do about it?" The answer is not in this directive.
The Minister should use his able powers of persuasion, which he has done on many other items of road safety, to achieve progress. To discuss the technicalities of this matter is all very well but there should be an easy solution whereby we can equip heavy goods vehicles with simple devices, which will not cost the operators a tremendous amount of money. If the simple devices are judged not to be right under the appropriate British standard, at least something is better than nothing.
I pay tribute to my hon. and learned Friend the Member for Burton (Mr. Lawrence) and I encourage his inventor to put forward his ideas. Surely after all this time Europe should be able to come to a solution. If foreign vehicles are creating the problem, I ask the Minister to ensure that they will achieve the standards that we need.

Mr. Peter Bottomley: I am grateful to the hon. Members who have contributed to the debate. It is an important issue and everyone who uses the roads when wet knows of the dangers that spray can create.
I pick up one point that was made by my hon. Friend the Member for Devon, North (Mr. Speller). If a heavy lorry is travelling along a motorway or a high-quality dual carriageway trunk road at, say, 60 miles an hour and throwing up a lot of spray, there is a sensible safe option to other motorists, which is not to try to overtake it. There is no reason why every domestic car driver should think that it is their duty to overtake every heavy goods vehicle, whether in wet or dry weather. I often think that we regard overtaking an HGV as a challenge and we somehow suffer in esteem if we do not always succeed in overtaking it.
There has been a significant advance in vehicles with spray suppression. Much of this debate has been concerned with spray suppression, because the sideguard issue, which is basic protection for pedestrians and cyclists, in non-controversial. The question whether they are rounded sideguards or flat sideguards is not enormously important. However, as the hon. Member for Stretford (Mr.Lloyd) mentioned, the height can be important. I will write to him on that matter and place a copy in the Library.
The issue of front underrun guards will be discussed in the House in the future. The Transport and Road Research laboratory is acknowledged all around the world as one of the leaders in virtually every subject that it takes up. Its work does show that energy-absorbing front underrun guards can help to save many of the lives presently lost in the approximately 250 serious crashes a year against the front of heavy goods vehicles.
We are basically considering spray suppression in the debate. My hon. and learned Friend the Member for Burton (Mr. Lawrence) has raised the question of his constituent, the inventor, M r. Maurice Goodall. As well as handing me the dossier that my hon. and learned Friend


has with him, it may be appropriate if I ask the Department to consider an up-to-date submission from Mr. Goodall. I know that my hon. and learned Friend will facilitate that and I am grateful to him for raising that issue. The whole political process goes from one person's private experience, publicly expressed—people often have to be persistent—which is then adopted by the overwhelming minority, which is likely to include the hon. Member for Huddersfield (Mr. Sheerman). I have paid tribute to the work of the parliamentary advisory committee and I pay tribute also to the hon. Gentleman as an individual.
I think that I can overcome some of the insults that were offered up by the hon. Member for Stretford. Sometimes I am accused of being power-crazed and sometimes of being powerless. I think that I work in good partnership with the knowledgeable people in the Department of Transport and in Parliament. Between us we have managed to create what the European Road Safety Year in 1986 was designed for—a cut in road accidents and road casualties.
In the year after European Road Safety Year, we saw a 10 per cent. cut in the casualty rate in Britain, which has left us one of the top four countries, with Japan, Norway and Sweden. It is important that the United Kingdom is up there. It is not coincidental that we are the country that brought in spray suppression regulations. I hope that other countries will follow us.
However, we want to allow ourselves the freedom to develop more effective measures. The House will be interested to know that we are in the final stages of research into whole vehicle testing on spray suppression. As I said earlier, the aerodynamics matter as much as the actual water or mist catching behind the axles and wheels. When we can move forward, we shall be able to see how other countries react. My suspicion is that in the same way that the Commission has modelled the draft directive on the British regulations, when we get to whole vehicle testing, it will be prepared to forward with a draft directive which is likely to be acceptable to others.
The hon. Member for Stretford raised the question of publishing and demonstrating the effectiveness of spray suppression. It would be sensible if we laid on a demonstration—not just for hon. Members who are interested, but for the media. Many operators do not understand why Parliament wants spray suppressed. Enough horrifying crashes and collisions have been linked to the reduction in visibility that is suffered, especially by HGV drivers. Spray is not just a problem for those behind who are trying to look forward; it is a problem for those sitting in the driver's cab and trying to look back.
It might be appropriate if I pay a tribute to British Road Services. I spent today in the BRS midland region in Nottingham and Birmingham, looking at vehicle maintenance. It is worth remembering that every HGV and trailer in this country is maintained. I also looked at driver training. If more operators trained their drivers as BRS does, and maintained their vehicles as BRS does, we should see fewer dangers on the roads and more spray suppression devices installed and maintained.
The debate has been useful

Mr. Tony Lloyd: I should like the Minister to address one point even if he does not answer it now. With 1992

aproaching and with the prospects that hon. Members of all parties have already put to the Minister of British roads being flooded, or at least entered, by Spanish and Portuguese drivers, how will the directives apply if, as the Government want, they are permissive? Will my fears be proved accurate and will Spanish lorries, for example, coming on to Britain's roads be protected by the directive and allowed here without adequate spray suppression devices?

Mr. Bottomley: One reason why, in my guess—it is no more than that—we shall not get a directive is that the draft directive cannot be accepted by most European countries. If the Commission's draft directive on spray is not accepted, we have the opportunity to go forward with our own work. It might be possible for the Commission to come forward with a directive that would receive unanimous support even as a permissive directive, which is the best way of protecting ourselves. As the House knows, we do not have the opportunity of putting requirements on international hauliers unless there is a directive which is either mandatory on all European Community hauliers or is permissive but has been adopted by European nations. It is important to work towards what is practicable and demonstrably cost-effective. In that way we shall get the type of protection that the hon. Member for Stretford and I seek.
The debate has shown that the motion demonstrates the mood of the House. I am grateful to each hon. Gentleman who has spoken and I am glad that this issue does not arouse any unnecessary party prejudice. I am delighted that the hon. Member for Huddersfield has joined his leader in welcoming our membership of the Common Market and let us milk that for what it is worth.

Question put and agreed to.

Resolved,
That this House takes note of European Community Document No. 8284/87 on spray suppression devices and lateral protection (sideguards) for certain categories of motor vehicles and their trailers; and endorses the Government's objectives of securing Community arrangements which would not require more stringent standards than those required in the United Kingdom at present, and amendment of the proposed Directive on spray suppression so as to make its application, like the proposed Directive on sideguards, permissive rather than mandatory, and restricted in scope to the same categories of vehicles as are covered by the existing United Kingdom Regulations.

PETITION

Search and Rescue (North Devon)

Mr. Tony Speller: I seek to present a humble petition on behalf of the residents of and visitors to north Devon who fear that helicopters of 22 Squadron (Search and Rescue), at present stationed at RAF Chivenor in north Devon, may be removed to RAF Brawdy in south Wales. There is an additional 30 minutes flying time from RAF Brawdy to north Devon and the petitioners believe that that flying time is too great to provide the same standard of cliff, moor and sea rescue facilities that presently prevails along the north Devon coast and throughout the area.
Wherefore your Petitioners pray that your Honourable House recognise the threat to safety and presses the Secretary of State for Defence to ensure that this service is continued from RAF Chivenor.
And your Petitioners, as in duty bound, will ever pray, etc.

To lie upon the Table.

Factory Space (Northern Region)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Alan Howarth.]

Mr. Giles Radice: I wish to discuss the question of factory space because it is important to the recovery of the northern economy.
I do not believe that there is much dispute about the nature of the problem. The Minister is well aware that there is an acute shortage of medium to large factories—between 7,000 and 50,000 sq ft—in the north. The good news is that the demand for units of more than 7,000 so ft has doubled in the past year. I understand that, up to 1 March 1988, there had been 511 inquiries about such sites, and the inquiries are continuing. The bad news is that the supply of such factories has fallen by 37 per cent. English Estates estimates that there are about 350 buildings of more than 7,000 sq ft now available in the north, but only 40 of them are sites of quality—that is, built in the past 10 years—which would attract inward investors. Some of those 40 buildings are already reserved. I understand that English Estates (North) told the Minister that there are only five modern premises of more than 10,000 sq ft which are vacant but not reserved.
A few examples will demonstrate the problems faced by different areas. In April 1986, in Durham there was almost 4 million sq ft of floor space available. By April 1988 the amount had been reduced to just over 2 million sq ft. In April 1987 there were 53 units of more than 15,000 sq ft, but by April 1988 that figure had gone down to 21, many of which are unsuitable for inward investors.
In Sunderland the demise of the Washington development corporation, coupled with the English Industrial Estates lack of resources, means that there will be no large-scale building in the borough until 1989–90 at the earliest. There are no modern units of more 10,000 sq ft availble in the borough.
In the Wear valley—I note that my hon. Friend the Member for Bishop Auckland (Mr. Foster) is on the Front Bench—there is no space available of more than 2,000 sq ft. English Estates has no plans to build there until October 1989.
What are the reasons for this considerable problem? First, few medium or large factories were built during the first half of this decade. The recession was the obvious reason for that. The possibility of rectifying the situation and increasing the supply has been curtailed by the reduced numbers of advance factory providers.
The major problem has been created by the winding up of Washington, Aycliffe and Peterlee new towns because in the past the new towns have been major providers of advance factory space. In Durham, for example, Aycliffe and Peterlee have been responsible for 370,000 sq ft compared with the 430,000 sq ft being built by English Estates—in other words, for roughly half. Now almost the whole of the advance factory programme will depend on what English Estates and the Rural Development Commission do. In their turn, English Estates is now tightly stretched and is planning only 10 extra factories above 10,000 sq ft in the coming financial year, which will not meet the demand. Therefore, the inescapable conclusion is that the north is rapidly running out of large-scale factory units for inward investors or for


existing businesses that want to expand. The demand for space now exceeds the supply, so there is a real danger that the north could lose potential investors to other regions.
The Government's answer is that, given the low supply of factories and the high level of demand, rents will eventually rise to a point which will attract private sector development. I am sure that that is what the Minister will tell me tonight, as the Secretary of State has already told me and a delegation which I led to see him before the recess. I have no ideological objections whatever to the private sector making a contribution. On the contrary, I am strongly in favour of partnership, as in the development agencies in my constituency and in that of my hon. Friend, between the public and private sectors to encourage development. I am prepared to accept that there should be some rise in rents, although it is a fallacy to think, as some do, that English Estates is not already asking for the market rent which industry will pay.
My difficulty and the difficulty of everybody who knows about the problem in the region is with the timescale. In reality, it will probably take at least two to four years of famine for factory rents to reach a level which is likely to attract private investors. Even then, the market will work unevenly. Some areas are likely to continue to prove unattractive to private investors in terms of rent potential. The likelihood is that if the Government continue to insist that we should wait for the private sector to invest, there will be a sizeable gap. Meantime, inward investors will be discouraged and go elsewhere, either to Scotland and Wales, where the development agencies have ensured that there is much more of the right kind of factory space and they have powers over planning as well as industrial development, or even turn to other countries. That is the problem that we face in the northern region.
The Government should now be taking steps to manage the gap between now and the time when the private sector comes in, if it does, off its own bat and without any incentives. Because I am constructive, which is what we should be in an Adjournment debate, I want to suggest some solutions which will help the north provide factory space which industry so desperately needs. Clearly what is needed is a transitional period during which the public and private sectors will work in partnership to help cushion the risk for the private sector. I accept the Minister's solution because he represents the Government, but I am trying to make sense of his solution. That is why I am trying to help him by suggesting possible partnership mechanisms.
First, the Government could provide tax concessions to the private sector to come in, such as are currently available in enterprise zones. Secondly, there could be a partnership agreement between the public and private sectors where the infrastructure for a factory development is provided by, say, English Estates and/or where English Estates makes grants to private sector companies for building purposes. Thirdly, the Government could allow English Estates to take what is called a head lease as a way of guaranteeing minimal rents to the private sector, thus encouraging it to come in.
These partnership mechanisms could be used by themselves or as elements in a package. I am not asking the Minister for snap answers tonight; it is too late for that. I offer him these ideas to study. Indeed, I go further: I would

be prepared to write the Minister a paper on the proposals which I have made because I would like him to examine them in detail.
The Minister must take the problem seriously, as everyone in the northern region does. It would be a tragedy—indeed, it would be unforgivable—if the long-awaited economic upswing in the north were to be choked by a shortage of factory space. If the Government are not prepared to fund public sector investment—I understand their thinking on this, although I do not necessarily accept it—they should at least be prepared to provide the facilities for a partnership between the public and private sectors which could help bridge the investment gap and provide the factory space which the north needs so much.

The Parliamentary Under-Secretary of State for Industry (Mr. Robert Atkins): I congratulate the hon. Member for Durham, North (Mr. Radice) on raising this subject by way of an Adjournment debate. I also welcome the spirit in which he addressed the House. I shall certainly consider the detail of what he has said and look forward to the report by a man of his education; doubtless it will be couched in delightful English. We shall consider it carefully.
The hon. Gentleman raised an important subject. Before I deal with the specific issue of factory space, I want to put the problem in the wider context of the improvements in the economy which have created the demand to which he has referred. As I heard one of my hon. Friends say in a sedentary intervention, these ironically are the problems of success. It is not just the Government who are proclaiming the resurgence in the north-east; the local CBI and chambers of commerce confirm a firmly established trend of increased demand, output and sales across a range of industries. Business confidence and optimism for the future are at their highest for some time.
I have paid visits to the north, as some Opposition Members will know, and have much enjoyed them, so much so that I am considering whether to spend a holiday there in August. I hope that hon. Members will recognise the attractions of their own area which my family may appreciate.
The region still faces special problems and has special needs and the Government now have policies that are more effectively focused to deal with them. The message that the north-east is an area of opportunity and growth with everything going for it in terms of availability of good skilled labour, good communications, excellent social, leisure and cultural facilities has reached the foreign investor who does not have a prejudiced and stereotyped image of the north-east. Such an image is sometimes presented in the media and, perhaps regrettably, talked about by those who live there. I have that problem in my part of the north of England and I spend much of my time trying to persuade people not to talk down their own region.
As I have said, the Japanese are particularly attracted to the north. They have seen the region and like it. Nissan, which has 2,700 jobs in prospect by the early 1990s, is acting as a catalyst for encouraging other companies, and not only Japanese companies, to the region. There are 21 Japanese firms in the region, one quarter of the national


total, and about 220 foreign-owned firms employing 36,000 people. All this has helped to broaden the region's economic base, and has introduced new skills and work practices to the north.
One of the most encouraging developments is the growth of entrepreneurship in the north-east, a region without any recent tradition of self-employment. The region has made great strides in this direction in recent years.
I should now like to come to the specific question raised in the debate. I am well aware of the demand for factory space, not only because the hon. Member for Durham, North brought a delegation to see me and has talked to me, but also because my hon. Friends have brought it to my attention. I am delighted to see my hon. Friends the Members for Darlington (Mr. Fallon), for Hexham (Mr. Amos), for Stockton, South (Mr. Devlin) and for Tynemouth (Mr. Trotter) expressing their commitment and interest. They are here in slightly greater numbers than the Opposition but I recognise that the hour is late and I do not make much point of that.
The hon. Member for Durham, North was fortunate enough to get this debate and there is interest in it in all parts of the House. The demand for factory space has substantially increased in the past year in many parts of the assisted areas, and I recognise that the amount of vacant space has declined. As I have said, this increased demand arises from the sustained economic upturn brought about by Government policies.
I hope that the hon. Gentleman will acknowledge what the Government have already done in this area. The level of resources going towards factory building by English Estates in the assisted areas as a whole has been substantially increased in recent years. In 1986–87 its capital development programme was £33·5 million. In 1987–88, it was increased to £47 million. For 1988–89 we have authorised English Estates to spend up to £49 million if it can produce the necessary resources from asset sales. These are record capital investment levels for English Estates and represent very significant action already taken by the Government. We have also established a new programme for English Estates to provide managed work space in the inner-city areas in partnership with the private sector. The resources for that programme are additional to the figures that I have just given.
Perhaps I could mention just two examples of how English Estates money has been spent in the north-east and to what effect. In 1980, the British Steel plant in Consett closed down. Over 28 per cent. of the working population were jobless. English Estates was called upon to help and, as part of the Derwentside task force, set about attracting new employers to the area. As a sign of its commitment, it opened an office and invested £12 million, building about 800,000 sq ft of property in five years. That was a mixture of large factories, small workshops, and premises designed for high technology businesses. As new companies moved in, over 2,500 jobs were created in the local community putting Consett well on the road to recovery.
More recently English Estates have built the computer aided design and computer aided manufacturing centre on the banks of the River Tees, the first of its kind in Europe, Funded by the public sector, the £1·5 million centre provides advice and powerful computing and information resources for high-tech businesses that are crucial to the future success of the north and the rest of the country.

Ms. Hilary Armstrong: I thought that the Minister was about to say a little more about Consett. I hope that he recognises that the very agencies that he congratulated are presently saying very loudly that they desperately need the next stage so that the firms that may be ready to expand are able to do so. Despite much effort, those agencies have not been able to attract private sector funding to aid such developments. Indeed, we are looking for some commitment to support the work that the development agency and the task force have already done.

Mr. Atkins: The hon. Lady draws attention to a point that we have accepted. I have said that it is a problem of success, but I recognise that none the less it is a problem.
I am advised that there is an increasing number of inquiries from the private sector to both Teesside and Tyne and Wear development corporations, which suggests that the climate for private sector investment is steadily improving in the north-east, largely as a result of the well-publicised shortage of advance factory space to which the hon. Member for Durham, North has already referred and to which I know my hon. Friends have referred previously.
I have given some examples of the organisation and development programme for English Estates. The question now is what the Government should be authorising English Estates to do in future in the light of booming demand for factory space. The call from some quarters has been for more public sector resource to satisfy current demand.
That approach is unattractive for a number of reasons, not least because the additional resources required would be very substantial. But there is a more fundamental reason, which has to do with the role of English Estates and our ultimate policy objective in that area. English Estates' role is to fill a gap in the market so that industrial and commercial premises can be provided in the assisted areas where the private sector is unwilling to risk the necessary investment.
The aim is that the activities of English Estates should encourage the private sector. Our objective, which I hope is shared by Opposition Members, is a properly functioning property market serviced by the private sector and flexible enough to be able to respond to the demands of the market in the north-east just as in the south. Our judgment is that pumping in more public sector resources would be very likely to delay the achievement of that long-term objective rather than to encourage it.
The current situation in the north-east offers an opportunity that we do not wish to miss to secure that objective. It is quite true that, for a lengthy period, yield levels have not been sufficient to stimulate private sector provision of industrial premises outside the south-east. With the changing economic climate, increasing demand and rising rents, returns are beginning to look more acceptable. The job for the region, as the chief executive of the Northern Development Company has recently recognised, is to do all it can to draw in private sector investment.
I do not pretend that that will happen overnight. There is bound to be a transitional period during which excess demand helps the necessary process of increasing rents to levels which will provide an adequate return to the private sector, but the consequence of avoiding the discomfort of such a transition by increasing Government-funded


provision would be to miss the major opportunity to re-create a private sector property market which I have mentioned.
That approach does not mean that the Government are ignoring the issue. There are a number of Government initiatives which are relevant to the provision of industrial and commercial property. The hon. Member mentioned the role of the two urban development corporations in the north-east, in Tyne and Wear and Teesside. Each is likely to spend well over £100 million during the next five years. The work of the UDCs is of major importance in creating the conditions to bring back private sector investment.
As far as English Estates is concerned, we are currently in active discussion with the board about how best its resources can be used in the areas where there is least prospect of an early return by the private sector and how, more generally, it can adapt its programmes and policies to give further encouragement to the private sector to respond to the current demand.
I am particularly pleased that the hon. Gentleman felt able to make his remarks in a spirit of understanding the Government's position, while not necessarily accepting it. I know that some of what the hon. Gentleman has said has

been considered before, but it needs further consideration. As he has been kind enough to say that he will produce a report, although he did not give a time scale—

Mr. Radice: It will be two or three weeks.

Mr. Atkins: I think that we can manage that. We look forward to receiving the report. We shall not make any policy decisions, so I can assure the hon. Gentleman that his views will be taken fully into account. He will understand, however, that I cannot give any guarantees about the results.
It is not simply a matter of public sector agencies encouraging the private sector. There is an opportunity, which I hope will be seized, for the private sector to reassess the risks involved and for investors and developers to expand the geographical spread of their activities. I believe that the present rising trend in the level of rents is a healthy sign for the north, confirming what I know my hon. Friends believe to be the case—they frequently tell the House that life in the north is not as bad as it is sometimes depicted. I am sure that the future of the north, and the substantial demand for factory space, which we all agree is a sign of economic success, means that private sector provision is not far off in many areas.

Question put and agreed to.

Adjourned accordingly at fifteen minutes to Twelve o'clock.